Fed is widely expected to leave key interest rate unchanged


WASHINGTON (AP) — With voters set to choose a new president and Congress in six days, the Federal Reserve will likely keep a low profile when it ends a meeting Wednesday to try to ensure it doesn't become part of the debate at the close of a tumultuous political campaign.

The Fed is expected to end the meeting with a policy statement that leaves interest rates unchanged. It's possible that the statement will include a signal that a rate hike is likely at the Fed's next meeting in mid-December as many expect. On the other hand, the Fed might decide to offer no hints Wednesday of a forthcoming rate hike in order to remain entirely neutral at a sensitive political moment.

"In the midst of an election, the last thing the Fed wants to do is add fuel to all the political controversy from the candidates," said Sung Won Sohn, an economics professor at California State University, Channel Islands.

Sohn and other economists say they still think December is when the Fed will resume the rate increases it began late last year after having left its benchmark rate at a record low near zero for seven years. Next month's meeting will include a news conference by Chair Janet Yellen, which would provide a platform for her to explain the Fed's action and perhaps provide guidance on how many further rate increases the Fed foresees in 2017.

The Fed's years of record-low short-term rates were credited by many analysts with rejuvenating the economy after the Great Recession. When the Fed finally raised rates modestly in December last year, most economists and the central bank itself foresaw multiple rate increases in 2016. But economic weakness and market turmoil in China and Europe and a slowdown in U.S. growth kept the Fed on the sidelines.

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