Oct. 28 (UPI) — The Federal Open Market Committee is set to make its latest interest rate decision Wednesday with the expectation that it will leave rates unchanged.
The consumer price index, the Federal Reserve’s preferred measure of inflation, increased in September to an annual rate of 3.7%, a four-month high and well above its 2% target. Last month the central bank hiked interest rates by 25 basis points to the 3.75% to 4% target range.
It was the first rate hike in three years.
Despite the continued economic pressures on consumers, including elevated gas prices due to the Iran war’s strain on the global fuel supply, investors are giving a less than 10% chance that the Federal Reserve will increase interest rates on Wednesday.
“Inflation is still the No. 1 problem in the U.S. economy, and there are a lot of signs it is getting more broad-based,” said Heather Long, chief economist at Navy Federal Credit Union. “For consumers, it means really high borrowing costs for the foreseeable future.”
Next week’s midterm elections also factor into the central bank’s decision, Long said, decreasing the likelihood of a rate hike.
September’s inflation reading was not the only sign that the U.S. economy is struggling. New job hires slowed to 29,000 for the month, down from 162,000 in August.
President Donald Trump has long called for the Federal Reserve to lower interest rates, sparring with former Fed chair Jerome Powell with threats of removing him for months.
The president has continued to call for the Federal Reserve to lower interest rates under current chairman Kevin Warsh, who was appointed by the president in the spring. When the Federal reserve increased interest rates last month, Trump took to social media reiterating his wish for lower rates.
“LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!” Trump said.