Federal Reserve officials are expected to slow the pace of interest rate hikes on Wednesday amid signs of slowing inflation. The expected smaller increase is a 0.25% rise from 4.5% to 4.75%, marking the second consecutive meeting when a lower hike was implemented.
Philadelphia Fed President Patrick Harker offered the following observation regarding the Federal Reserve’s next moves: “I expect that we will raise rates a few more times this year, though, to my mind, the days of us raising them 75 basis points at a time have surely passed. Hikes of 25 basis points will be appropriate going forward.”
Investor outlook on the direction of the economy is also expected to be enhanced upon the release of the U.S. jobs report on Friday. Expectations are that a steady demand for workers will be reported, which would mean an increase in the chance of a smooth economic recovery for the U.S.
Economists have forecast a slowdown in hiring in January, with 185,000 jobs being added compared to 223,000 in December. They expect the unemployment rate to hover around 3.6%; a figure that is still near a five-year low.