US wages gains will get Fed's attention; no rate hike yet
Wage gains at long last have made an appearance in the US economy after a baffling absence amid robust job growth but the Federal Reserve is expected to hold its fire next week.
Central bankers certainly will take notice of the recent data, with especial focus on everything contributing to inflation, but have made it clear they are committed to a gradual pace of increases in the benchmark lending rate, meaning the fourth hike of the year will not come until December.
The Fed's rate-setting Federal Open Market (FOMC) meets Wednesday and Thursday but, in keeping with recent custom, economists do not expect any moves to be made since this meeting is not one that will be followed by a press conference with Fed Chairman Jerome Powell.
That dynamic will change next year when Powell will hold a briefing after every policy meeting, making economists' forecasts a bit more lively.
Fed officials have made it clear the economy can continue to perform well for some time with the current course of rate increases. Three more are expected next year as the central bank removes stimulus from the economy to prevent price pressures from accelerating.
The meeting takes place against the backdrop of President Donald Trump's repeated attacks on Powell for raising rates, which has injected an unwelcome political element into the deliberations. Trump said the Fed has gone "crazy" and posed the greatest threat to his economic policies by moving too fast.
"He was supposed to be a low-interest-rate guy. It's turned out that he's not," Trump said.
But the Fed has made it clear more rate hikes will be needed, since as companies increasingly are having difficulty finding and keeping workers, which likely means wages will rise faster.
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