Fed likely to hike rates again, despite Trump's tweets

/ AP

Uncertainty behind declines in stock market

Washington – The Federal Reserve is expected Wednesday to raise its benchmark rate for a fourth time this year despite President Donald Trump's repeated assertions that doing so would be a terrible idea.

The president fired off two tweets this week objecting to a rate hike. In one of them, he called it "incredible" that the Fed would consider raising rates again when "the outside world is blowing up around us."

No matter, in the lead-up to this week's meeting, Fed officials have signaled that they're set to raise rates Wednesday.

Still, after Trump's stream of tweets, continued losses on Wall Street, persistent trade frictions and growing evidence of a global slowdown, some doubts have arisen among Fed watchers. The CME Group's index of investor expectations has put the likelihood of no rate increase Wednesday at 28 percent — an unusually high level of doubt on the eve of an anticipated Fed announcement.

Trump: Federal Reserve thinks "our economy's too good"

After this week, prospects for the course of interest rates will become more uncertain. Investors hope to glean some clues from the Fed's latest policy statement, along with an updated economic outlook and a news conference by Chairman Jerome Powell. Many analysts think the Fed will signal it's considering whether to slow or suspend its rate hikes in 2019 to avoid weakening the economy too much. And some predict that the rate increases, which began three years ago, will end altogether next year.

In September, Fed officials collectively forecast that they would raise rates three times in 2019. This week, though, many analysts think the central bank could indicate no more than two rate hikes are likely next year.

Yet the central message coming out of Wednesday's meeting may be that the Fed plans to suit its rate policy to the latest economic data. In Fed parlance, it will be "data-dependent."

The idea is that the Fed may want to pause in its credit tightening to assess how the economy fares in the coming months in light of the headwinds it faces. Contributing to this view was a speech Powell gave last month in which he suggested that rates appear to be just below the level the Fed calls "neutral," where they're believed to neither stimulate growth nor impede it. Powell's observation suggested that the Fed might be poised to soon slow or halt its rate hikes.

IMF chief sees "no signs" of U.S. recession "in the near term"

For now, most U.S. economic barometers are still showing strength. The unemployment rate is 3.7 percent, a 49-year low. The economy is thought to have grown close to 3 percent this year, its best performance in more than a decade. Consumers, the main fuel for the economy, are spending freely.

In such an environment, the Fed would normally keep gradually raising rates to make sure the economy didn't overheat and ignite inflation. But this time, risks to growth appear to be rising. From China to Europe, major economies are weakening. President Trump's trade conflict with Beijing could, over time, undermine the world's two largest economies.

Many also fear that the brisk pace of U.S. growth this year reflected something of a sugar high, with the economy artificially pumped up by tax cuts and a boost in government spending. The benefit of that stimulus will likely fade in 2019, slowing growth to a more modest pace.

Economists believe that whatever the Fed does today, it won't be influenced by the attacks Trump has made on the central bank and on Powell personally since the stock market began tumbling this fall. Powell, who was Trump's hand-picked choice to be chairman, has stressed that the Fed will pursue its mandate of managing rates to maximize employment and stabilize prices, regardless of any outside criticism.

The White House gave no indication that Mr. Trump plans to soften his views on the Fed.

Press secretary Sarah Huckabee Sanders told reporters Tuesday: "The president is stating his opinion, which he is perfectly within his right to do."

First published on December 19, 2018

© 2018 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

Fed likely to hike rates again, despite Trump's tweets

And the president's complaining about higher interest rates isn't the only problem the central bank faces

updated 8M ago

Is Wall Street signaling a U.S. recession ahead?

The stock market's tumble could be an ominous warning or just misguided – here's where to look for the signs

1H ago

Family searching for blind U.S. woman missing in Peru

Her family says she was in Peru for a wedding and planned to return to Detroit last Saturday

1H ago

A test drive in the tunnel Elon Musk hopes will solve L.A. traffic

At only 12 feet in diameter, "CBS This Morning" co-host Gayle King found it a bit more claustrophobic than most transportation tunnels

updated 47M ago

Trump tariffs hit middle- and low-income earners most

With the price of some consumer goods rising, here's how much tariffs are costing the average U.S. family

updated 49M ago

Transcript: Nadia Schadlow talks with Sandy Winnefeld on "Intelligence Matters"

Former Trump deputy national security adviser for strategy talks with former Vice Chairman of Joint Chiefs Sandy Winnefeld on "Intelligence Matters" this week

2H ago

The U.S. national security strategy: One year later

On CBS News "Intelligence Matters" podcast, guest host retired Admiral Sandy Winnefeld examines blueprint's progress with document's lead author, Nadia Schadlow

1H ago

Senate passes bipartisan criminal justice bill

Senate voted Tuesday night to approve a sweeping criminal justice overhaul supported by President Trump

5H ago

The Takeout: A CBS News original political podcast

“The Takeout” is a weekly podcast about politics, policy and pop culture hosted by CBS News Chief White House correspondent Major Garrett

15H ago

North Carolina governor vetoing bill with congressional race redo

State Democratic and GOP leaders are calling for a new election for a disputed House race in North Carolina's 9th Congressional District over election fraud claims

17H ago

U.S. envoy on mission to dislodge North Korea nuclear talks

White House special envoy Stephen Biegun says U.S. will "review" tight travel restrictions to help ease flow of humanitarian aid

updated 12M ago

Children are sent to the front lines in Yemen's war

Young soldiers can be seen manning checkpoints, AK-47s dangling from their narrow shoulders

updated 59M ago

Yemen's warring sides blame each other as ceasefire tested again

But the truce still appeared largely intact with U.N. monitors expected to arrive and the details of a major prisoner swap being hashed out

2H ago

Haley pushes Mideast peace plan in closing Security Council remarks

"It recognizes the realities on the ground in the Middle East have changed — and changed in very powerful and important ways," Haley said

15H ago

First transgender woman competes in Miss Universe pageant

"Today I am here, proudly representing my nation, all women and human rights,” she said

15H ago

Gisele Bündchen in note to younger self: "You are enough"

"Keep following your heart and don't apologize for being you," she writes

updated 2M ago

Penny Marshall, "Laverne & Shirley" star, dead at 75

Actress Penny Marshall, best known for playing Laverne DeFazio on "Laverne & Shirley," has died

8H ago

Stars pay tribute to Penny Marshall

The "Laverne & Shirley" star and successful director died at her Hollywood Hills home from diabetes-related complications

14H ago

First transgender woman competes in Miss Universe pageant

"Today I am here, proudly representing my nation, all women and human rights,” she said

15H ago

Cardi B gets asked out on "Carpool Karaoke"

The rapper has some new fans at the Culver City Senior Center

17H ago

Facebook gave tech giants more access to users' data than it said: report

New York Times story could add to the pressure Facebook's been under regarding its protection of the privacy of that data

updated 3M ago

Once tasty Blue Apron is now a penny-stock

Online meal-kit delivery service has seen its value plunge 90 percent since a 2017 IPO

14H ago

#LogOutFacebook fuels protests, canceled accounts

Facebook's data breaches and privacy issues are prompting critics like the NAACP to log off their accounts

14H ago

Huge floating device isn't trapping plastic in Pacific Ocean

The young innovator behind the project said a fix was in the works

15H ago

Sandberg says Facebook needs to do more to protect users' civil rights

Facebook released the findings of an audit led by a longtime ACLU director

18H ago

11-year-old girl's brain tumor disappears in medical mystery

"It was unbelievable. The tumor is undetectable on MRI scans, which is very unusual"

13H ago

How food choices may affect your brain's destiny

Dr. David Perlmutter claims eating foods high in carbs causes brain inflammation and can trigger conditions like anxiety, depression and ADHD

19H ago

Drone delivers vaccines for kids on remote island

The drone delivery covered almost 25 miles of rainforests and rugged mountainous terrain

20H ago

How does federal judges' health insurance stack up?

With a federal court ruling that Obamacare is unconstitutional, here's a look at the kind of health coverage judges get

Dec 18

Child abuse rises on day after Friday report cards, study shows

But no such trend noted on other days of week, and researchers could only speculate about the reason for the increases

Dec 18

Fed likely to hike rates again, despite Trump's tweets

And the president's complaining about higher interest rates isn't the only problem the central bank faces

updated 8M ago

Is Wall Street signaling a U.S. recession ahead?

The stock market's tumble could be an ominous warning or just misguided – here's where to look for the signs

1H ago

Trump tariffs hit middle- and low-income earners most

With the price of some consumer goods rising, here's how much tariffs are costing the average U.S. family

updated 49M ago

Facebook gave tech giants more access to users' data than it said: report

New York Times story could add to the pressure Facebook's been under regarding its protection of the privacy of that data

updated 3M ago

Mega Millions winning numbers announced for $284M jackpot

Tuesday's jackpot has an estimated cash value of $167 million

5H ago

Senate passes bipartisan criminal justice bill

Senate voted Tuesday night to approve a sweeping criminal justice overhaul supported by President Trump

5H ago

Woman in New York fights back, prevents her car from being stolen

Bronx mother Tihisha Jones gets street justice after stopping a suspected car thief in his tracks — and it was all caught on camera

12H ago

Man in alleged GoFundMe scam could face jail on traffic charges

Mark D'Amico, his girlfriend and a homeless veteran allegedly concocted a good Samaritan story to scam donors

21H ago

Teen caught on video attacking girl wearing hijab in school

Authorities in suburban Pittsburgh say they deem the bathroom incident bullying, not hate crime for now

21H ago

Two Chicago police officers killed by train

Police said the officers were investigating a call of shots fired when they were hit by the passing train

Dec 18