Dec. 10 (UPI) — The Federal Reserve is expected to slash the benchmark interest rate to boost hiring on Wednesday despite rare public disagreement among policymakers, experts say.
The Federal Open Market Committee will likely agree to its third-straight cut by a quarter percentage point, bringing interest rates down to 3.5% to 3.75%. And just as in the past two rate cuts, the decision isn’t expected to be unanimous, NPR reported.
Lowering federal interest rates will make car payments and credit card payments a little cheaper, boosting spending during a hiring slump. However, doing so threatens to worsen inflation, which has been on the rise.
Federal Reserve Chairman Jerome Powell, speaking at a news conference in October, warned, “we have one tool” when it comes to fixing employment and inflation woes.
“You can’t address both of those at once.”
ABC News reported that despite some disagreement among the FOMC about whether to further cut rates, there’s been more openness to do so among members. The CME FedWatch Tool, which measures market sentiment, showed an 87% chance of a cut, up from 30% in November.
Bill English, former director of monetary affairs at the Fed and a current Yale professor, told CNBC to be prepared for the FOMC to make a cut but to keep rates there for the foreseeable future.
“The likeliest outcome is a kind of hawkish cut where they cut, but the statement and the press conference suggesting that they may be done cutting for now,” he said.
Complicating matters is a like of economic data from the government as a result of the six-week government shutdown. October’s numbers were largely skipped and November’s have been delayed.