The Federal Reserve began its two-day policy meeting on Tuesday and experts wonder whether damage inflicted by recent hurricanes across parts of the United States could stave off an interest rate hike initially predicted for later this year.
While the Fed is not expected to hike interest rates during the September meeting, officials projected one more raise before the end of the year. However, concerns over billions of dollars’ worth of economic damage, and a potential impact on GDP, have caused some to believe the central bank may alter that timetable.
“Harvey and Irma losses are still being determined but it will likely exceed $200 billion which will hurt GDP going forward. This cements, along with declining inflation, no policy action out of the Fed until likely mid-2018,” Mary Ann Hurley, Vice President of Fixed Income Trading at D.A. Davidson & Co., said in a statement.
The central bank approved rate hikes in March and June of this year.
On the other hand, some believe the hurricanes won’t impact the Fed’s decision making, but rather policy decisions – including an expected announcement on Wednesday that the central bank will begin unwinding its massive $4 trillion balance sheet – will continue to be based off of Fed Chair Janet Yellen’s clearly communicated mandates and goals.
“The Fed has made their framework very clear and taken great pains to communicate it to markets,” Tate Lacey, policy analyst at the Cato Institute’s Center for Monetary and Financial Alternatives, told FOX Business. “As such, there is almost no…