WASHINGTON: The US Federal Reserve is expected to keep interest rates unchanged on Wednesday amid tepid inflation and recent weak economic data, but could signal an increased likelihood of a hike by the end of the year.The US central bank raised its benchmark overnight interest rate to a range of 0.25% to 0.50% in December, the first hike in nearly a decade, but has held rates steady this year.Economists polled by Reuters see a slim chance of a rate increase at the conclusion of the Fed's two-day policy meeting on Wednesday, with the majority expecting one at the meeting in December. "Boston Fed president Eric Rosengren, usually seen as a policy dove, also noted earlier this month that the risks to the economy were "becoming increasingly two-sided. "That remark initially led markets to start pricing in a September rate surprise, although those expectations have since receded.With Yellen unlikely to tip the committee's hand forcefully either way, a compromise could assuage concerns. That will likely on Wednesday be cut to one.The policymakers are also likely to downgrade their estimates for how many rate rises the economy will need in the coming years given that output, productivity and inflation are growing slower than in past decades.All of which means intense scrutiny on Yellen's comments in the press conference, coming on the heels of her assessment in late August that the case for a rate hike had strengthened in recent months. "She's likely to convey that she sees the fundamentals consistent with a move in the relatively near term," said Randy Kroszner, a former Fed governor who is now an economics professor at the University of Chicago Booth School of Business.

Source: The Star September 21, 2016 06:11 UTC