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The U.S. Federal Reserve is set to leave the interest rates unchanged this week at the end of the April policy meeting but will likely further stoke expectations that it will raise borrowing costs in June amid the rising inflation and low inflation.
Investors have all but weighed in the prospects of a rate increase at the end of the Fed's two-day policy meeting on Wednesday, especially given its habit in recent years of only raising rates at meetings that are followed by press conferences.
The U.S. central bank is set to announce its decision at 2 PM EDT on Wednesday. Fed Chairman Jerome Powell is not slated to hold a press conference after the meeting.
The Fed lifted its benchmark federal funds rate at its March 20-21 meeting by a quarter percentage point to a target range between 1.50 percent and 1.75 percent. It now sees two more rate hikes this year, despite an increasing number of Fed officials projecting three more rate hikes as a possible scenario. The Fed's next policy meeting after this week is slated for June 12-13, a meeting in which investors overwhelmingly see a rate hike.
The rate of increases has sped up since the central bank started its tightening cycle in December 2015. It lifted rates only once in 2016, but raised borrowing costs three times last year amid a strengthening economy.
The unemployment rate currently at a 17-year low of 4.1 percent and the Trump administration's tax cuts and fiscal stimulus are seen to further boost the economy.
Ahead of the meeting, Powell has stood by his centrist approach on rate hikes in the face of data indicating the robust economy has not year shown a surge on inflation. But data on Monday reported by the U.S. Commerce Department showed the Fed's preferred measure of inflation has surged 1.9 percent in the 12 months through March, near the Fed's 2 percent target.
