Fed set to leave rates alone amid signs of rising inflation
WASHINGTON — The Federal Reserve achieved an inflation milestone this week, but that isn’t likely to alter expectations for what the Fed will announce when its latest policy meeting ends Wednesday.
After six years of mostly missing its annual 2 per cent target for inflation, the Fed learned Monday that its preferred gauge of consumer inflation had reached a year-over-year pace of 2 per cent. And in coming months, inflation is widely expected to stay around that level.
The debate the Fed is now likely to have is whether it should accept a period in which inflation rises above 2 per cent without accelerating its pace of rate increases. For now, a rate increase is considered unlikely. In a statement it will issue Wednesday afternoon, the Fed is expected to leave its benchmark rate unchanged.