The US Federal Reserve begins its two-day meeting today but is expected to keep interest rates on hold ahead of the November 9 US general election. However, investors will be focused on the language used in any statement to gauge how confident the central bank has become about raising rates at next month’s (December) meeting when it is widely expected to increase the cost of borrowing by 25 basis point.

Solid improvements in payrolls and evidence of rising consumer prices have prompted an increase in hawkish rhetoric from the various voting members at the FOMC (Federal Open Markets Committee) and, elsewhere, economic growth appears to have increased as evidenced by last week’s US Commerce Department’s first estimate of third quarter GDP which came in at a better-than-expected annualized rate of 2.9%.

Investors are ruling out a move in this month’s meeting given its proximity to the US presidential election but, barring all but catastrophic economic data between now and the Fed’s December meeting, most are prepared for a 25 basis points increase in the Fed funds rate.

“We think December’s a lock,” said Eric Stone, chief economist at Trade Inc.

“It’s only 25 basis points but it will at least help restore some credibility to a central bank that’s spent most of 2016 promising a great deal but delivering very little in the way of actual policy.”

Trade Inc says that, despite the hike, it believes that US interest rates are likely to remain at very low levels and “accommodative” for at least another three years.

About Trade Inc.
Trade Inc. offers impartial, personalized investment advice, supported by painstaking research. They work diligently and intelligently to deliver a service that presents their clients with the prospect of being able to not only realize but exceed their financial aspirations. Their investment and financial planning services have been designed to provide the best possible professional advice with modern-day, innovative strategies.