Waiting for the Fed

Business correspondent Betsy Stark blogs in advance of today’s announcement: Is today the day the Fed finally DOESN’T do it? That’s the big question in the financial markets today. After 17 rate hikes, the betting is the nation’s central bank may PAUSE in its two-year campaign to slow the economy and tame inflation after raising its benchmark interest rate from 1 percent to 5.25 percent.  But the Fed is in a tough spot as it meets today. There’s no doubt the economy has slowed — the data on GDP, consumer spending, housing, and jobs all confirm that growth has slowed from its blistering first-quarter pace. What is in doubt is whether inflation is sufficiently in check for the Fed to take its foot off the brakes. And yesterday’s news that oil giant BP will have to shut down production at the biggest oil field in America could throw a wrench into the equation. The shutdown is bound to stoke inflation by driving energy prices even higher. Economists are still hoping the Fed has engineered a SOFT LANDING but slowing growth and rising energy prices have put a new worry on the table: STAGFLATION — STAGNANT GROWTH plus INFLATION. Stay tuned: the Fed’s decision on rates will be announced at 2:15 ET. As always, we’ll be looking not just at what the Fed does, but what the Fed says… For clues about its thinking and future Fed actions.