5 Things To Watch at This Week's Fed Meeting

        By Ben Leubsdorf
        The Federal Reserve's two-day policy meeting this week may be the calm before the storm. The central bank is unlikely to start raising short-term interest rates before September at the earliest. Chairwoman Janet Yellen is not holding a press conference and the Fed won't release updated economic projections. But officials may drop fresh clues about the economy's trajectory and, by extension, the outlook for policy. Here are five things to watch when the Fed issues its policy statement Wednesday at 2 p.m. EDT.
        #1: Rates on Hold
        It would be a surprise--to say the least--if the Fed on Wednesday raised its benchmark short-term interest rate for the first time since 2006. Policy makers haven't telegraphed an imminent move, and no private economist surveyed by The Wall Street Journal this month predicted a July liftoff. Officials could offer hints about whether the big moment is approaching by tweaking their description of the economy and whether it is approaching the central bank's goals, but an explicit signal seems unlikely given the Fed's stated intention of reacting to incoming data meeting by meeting.
        #2: Job-Market Progress
        The Fed has said it wants to see further improvement in the labor market before beginning to raise rates. Ms. Yellen told lawmakers earlier this month that the job market "has continued to show progress toward our objective of maximum employment," and added that "the labor market is getting demonstrably closer...to a more normal state." If the policy statement includes a similarly upbeat assessment, it could signal that liftoff is approaching.
        #3: Inflation Insights
        Officials have said they want to be "reasonably confident" inflation will rise to their 2% annual target before raising rates. Watch for changes from June's policy statement for insight on their thinking. For example, last month the statement said "energy prices appear to have stabilized," but oil prices have tumbled in recent weeks.
        #4: Consumers and Growth
        The Fed's June statement noted a moderate pace of economic growth, helped by moderate growth in household spending. Ms. Yellen told lawmakers this month that strong auto sales suggest "that many households have both the wherewithal and the confidence to purchase big-ticket items." Stronger consumer spending would offer an important boost to the broader U.S. economy, though the Commerce Department's weak reading on retail sales during June might temper any enthusiasm.
        #5: Era of Good Feelings
        If the Fed's policy statement is approved by a 10-0 vote, it would be the fifth unanimous decision in a row--the Fed's longest dissent-free streak since 2009. But unanimity won't last forever. At the June 16-17 meeting, one unnamed official was ready to vote for a rate increase "but also expressed a willingness to wait another meeting or two for additional data," according to the minutes. Keep an eye on Richmond Fed President Jeffrey Lacker, who was a regular dissenter in recent years but has voted with the majority so far in 2015.
        (END) Dow Jones Newswires

        July 28, 2015 18:44 ET (22:44 GMT)

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