US Fed expected to hold interest rates; may focus on lowering bond holdings

The United States (US) Federal Reserve is expected to hold interest rates unchanged on Wednesday and possibly hint that it will start winding down its massive holdings of bonds as soon as September in what would be a vote of confidence in the US economy. The US central bank will issue its latest rates decision following the end of a two-day policy meeting at 2 pm EDT (18:00 GMT). Economists expect the Fed's benchmark lending rate to remain in a target range of 1.00 per cent to 1.25 per cent. That would mark another pause in the monetary tightening campaign that the Fed began in December 2015. The central bank has raised rates twice this year, including at its last policy meeting in June. Wall Street analysts see little chance the Fed will announce the start of the wind down of its $4.5 trillion balance sheet. However, the Fed's policy statement may provide more visibility on when that might occur. Commodity Trading Tips

Citibank economists said in a note to clients that the Fed's rate-setting committee was more likely to say that the trimming would start soon. "(That would) signal that the committee plans to announce balance sheet reduction in September," they said in the note. Reducing the balance sheet will unwind one of the Fed's most controversial tools used to fight the 2007-2009 financial crisis and its aftermath. After pushing rates nearly to zero in a bid to boost investment and hiring, the Fed pumped over $3 trillion into the economy through purchases of US Treasury securities and government-backed mortgage debt to further reduce rates. That program drew criticism from Republican lawmakers in Congress. Astrology and Numerology Trading Tips