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Fed Leaves Rates Unchanged, Cites 'Solid Rate' of Economic Growth; Central bank says, 'Economic activity has been rising at a solid rate despite hurricane-related disruptions' Harrison, David . Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Nov 2017: n/a.

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FULL TEXT The Federal Reserve left short-term interest rates unchanged Wednesday, but suggested it remained on course to

lift them before year's end amid signs the economy is gaining momentum.

Officials have penciled in one more move for 2017 if the economy stays on track. The Fed has one more meeting

scheduled before the end of the year, on Dec. 12-13. The central bank has raised its benchmark federal-funds rate

four times since late 2015, in quarter-percentage-point steps, to a current range between 1% and 1.25%.

"Economic activity has been rising at a solid rate despite hurricane-related disruptions," the Fed said in a

statement Wednesday after the conclusion of its two-day policy meeting.

Gross domestic product, the broadest measure of goods and services produced in the U.S., rose at a 3% annual

rate in the third quarter, the Commerce Department said Friday. That followed 3.1% annualized growth in the

spring, for the best six-month stretch of growth in three years.

The storms that hit the Gulf Coast and Florida in late summer "are unlikely to materially alter the course of the

national economy in the medium term," the Fed said.

Fed Chairwoman Janet Yellen, in her most recent public remarks, kept the door open to another rate increase this

year , saying the "ongoing strength of the economy will warrant gradual increases." But she didn't say when the

next move was likely.

Market expectations for a rate increase in December are high, and Fed officials have done little to dispel them.

Several analysts said the Fed included no surprises in its statement and anticipated a rate increase at the

December meeting.

"It remains reasonable, barring some large outside shock to the economy, to expect a hike at the Fed's meeting

next month," said Michael Feroli, chief U.S. economist at J. P. Morgan.

Robust household spending, upbeat consumer sentiment, a strong labor market and better growth overseas are

likely to offer support for Fed officials inclined toward raising rates before year's end to ensure the economy

doesn't overheat. While U.S. employers shed 33,000 jobs in September --largely attributed to the recent hurricanes--

the statement noted that the unemployment rate "declined further." The unemployment rate dropped to 4.2% in

September, the lowest level since 2001. Ms. Yellen also said recently that progress on average hourly earnings was

"encouraging."

Boston Fed President Eric Rosengren said in an October interview that if the economy performs as expected,

"December seems like a reasonable time" for another rate rise.

Atlanta Fed President Raphael Bostic told reporters in September, "I am at this point looking--feeling pretty

comfortable about the idea that we will be looking to move rates come December."

Some officials, however, have said recently they want to see more evidence that inflation is rising toward their 2%

target before they support another rate rise. The Fed's preferred price gauge, the personal-consumption

expenditures price index, rose 1.6% on the year in September, but that was largely because of a storm-related

surge in gasoline prices. So-called core prices, which exclude volatile food and energy items, were up 1.3%.

Central bankers generally like to see inflation holding steady at around 2% because it signals a growing economy

and allows them to hold rates high enough that they can safely cut them to fight an unexpected downturn.

Minneapolis Fed President Neel Kashkari, who voted against the central bank's two rate increases this year, wrote

in an essay last month, "My preference would be not to raise rates again until we actually hit" 2% inflation.

Ms. Yellen has described the inflation undershoot in recent months as a "mystery," though her "best guess is that

these soft readings will not persist."

The Fed meeting occurred as President Donald Trump was preparing to announce his pick to lead the central bank

after Ms. Yellen's term as chairwoman expires in February. Although he has praised her and considered offering

her a second term, Mr. Trump is likely to nominate Fed governor Jerome Powell , perhaps as soon as Thursday,

according to a person familiar with the matter.

Mr. Powell has been an ally of Ms. Yellen on monetary policy, saying at an event last month the Fed's efforts to

raise interest rates from postcrisis lows to a more normal level "should continue to be gradual, as long as the U.S.

economy evolves roughly as expected."

The Fed meeting was also the first attended by Mr. Trump's first nominee to the Fed board, Randal Quarles, who

took office last month as the central bank's vice chairman for supervision.

Mr. Quarles, along with the other board members and five regional Fed bank presidents, are voting members of the

central bank's policy committee.

The committee's vote was unanimous.

Write to David Harrison at [email protected]

Related

* Trump to Tap Powell as Fed Chief

* Jerome Powell in His Own Words

* Fed Speech Analyzer

* Yellen's Exit Would Break From Precedent

* Powell Would Offer Continuity in Policy

* How the November Statement Changed From September

Credit: By David Harrison

DETAILS

Subject: Interest rates

Location: United States--US

People: Rosengren, Eric Bostic, Raphael

Company / organization: Name: JPMorgan Chase &Co; NAICS: 522110, 522292, 523110

Publication title: Wall Street Journal (Online); New York, N.Y.

Pages: n/a

Publication year: 2017

Publication date: Nov 1, 2017

Section: Economy

Publisher: Dow Jones &Company Inc

Place of publication: New York, N.Y.

Country of publication: United States

Publication subject: Business And Economics

Source type: Newspapers

Language of publication: English

Document type: News

ProQuest document ID: 1958313629

Document URL: http://proxy.ashland.edu:2048/login?url=https://search.proquest.com/docview/195

8313629?accountid=8392

Copyright: (c) 2017 Dow Jones &Company, Inc. Reproduced with permission of copyright owner.

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Last updated: 2017-11-02

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