Fed likely to raise interest rates for 4th time this year

Markets are rising modestly on Wednesday ahead of a Federal Reserve decision on whether to raise interest rates or hold them steady this year.  The U.S. central bank’s rate-setting body has already voted to raise its key interest rate three times this year, but has faced calls in recent weeks to slow down its increases, including a steady stream of criticism from President Donald Trump.

What time does the Fed announce today?

The Fed posts a statement online at 2:00 p.m. Eastern Time with its decision. At 2:30 p.m., Fed Chairman Jerome Powell is expected to hold a press conference, where he will take questions and likely offer his views on the economy and inflation heading into 2019.

What does it mean if interest rates go up?

The Fed’s benchmark rate sets the interest banks pay to borrow from each other over very short time periods. That rate is currently set in a range between 2 and 2.25 percent. It in turn affects rates all over the consumer economy, including interest rates for loans, credit cards and on savings accounts, to name a few. (Student loan rates, which are set by Congress, are less affected.)

After a Fed rate hike, credit card companies are usually fastest to respond by hiking the interest they charge consumers. Banks wait somewhat longer to offer savers a higher interest rate on their accounts, with the most generous banks currently offering 2.05 percent APY for a savings account, and slightly more for a CD.

What else is the Fed announcing?

In addition to setting its target interest rate, the Fed also updates its outlook for economic growth for the U.S. for the coming years. Its latest outlook, released in September, was positively glowing. It predicted that the economy would expand a robust 3.1 percent in 2018 before slowing to still-solid 2.5 percent in 2019.

Since that time, though, global growth has become decidedly weaker, potentially posing a risk to the U.S. economy. Growth in China, the world’s second-largest economy, is slowing. So is Europe, where Italy is on the verge of recession and Britain is struggling to negotiate an exit from the European Union. In addition, interest-rate sensitive sectors of the U.S. economy such as housing and autos are under more pressure.

If the Fed does downgrade its economic outlook, it would help solidify expectations that it’s poised to scale back its rate increases next year. 

The Associated Press contributed reporting.