The Federal Reserve is widely expected to raise interest rates later this year for the first time since the Great Recession. But with inflation still below the Fed’s target some wonder whether the central bank will have the courage to pull the trigger.
Inflation has been stuck below the Fed’s 2 percent target for more than three years despite the Fed’s aggressive efforts to spur economic growth with low rates and large-scale asset purchases. The Fed has hinted that it is ready to raise rates soon but some economists believe the central bank will wait until inflation is closer to its target before taking action.
Others believe the Fed will move sooner rather than later. They point to the strong jobs market and the Fed’s own forecasts which show inflation picking up in the coming years.
The truth is no one knows for sure what the Fed will do. The central bank is notoriously opaque and its members rarely tip their hand on future policy moves.
But with the economy improving and inflation slowly rising the case for a rate hike is growing stronger. If the Fed decides to act it could have a major impact on the economy and the financial markets.
What is the likelihood of the Fed raising interest rates?
The Fed is not likely to raise interest rates.