The Federal Reserve is expected to hold interest rates steady this week — and possibly for months to come — as policymakers try to sort through mixed signals about the U.S. economy.
The Federal Reserve has promised to be"data driven" in deciding when to cut interest rates. But some of the recent economic data has the central bank driving in circles.
As they try to sift through sometimes contradictory economic signals, Fed policymakers are likely to stick with their go-slow approach, leaving interest rates unchanged this week — and possibly for months to come.Inflation fell sharply in the second half of last year, leading some to believe the Fed would soon be ready to take its foot off the brake and start cutting interest rates.
So while the Fed can influence demand for cars and houses by adjusting interest rates, its ability to tamp down demand for restaurant meals or concert tickets is more limited. "That's one of the reasons why the consumer remains fairly willing to go out to restaurants and go to the mall," says Oren Klachkin, financial market economist at Nationwide."They're not feeling that pain of the high-rate environment. Of course, that means that inflation is not going to come down as fast. But that's kind of the tradeoff that we're in right now."
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