US Fed meets amid fiscal policy uncertainty

A police officer keeps watch in front of the US Federal Reserve in Washington on Oct 12, 2016.
A police officer keeps watch in front of the US Federal Reserve in Washington on Oct 12, 2016. PHOTO: REUTERS

NEW YORK • The US Federal Reserve will be on investors' watch list as it begins a two-day meeting on interest rates today, the first gathering of its policy-setting body since US President Donald Trump took office on Jan 20.

The Fed is expected to keep interest rates unchanged as it awaits greater clarity on Mr Trump's economic policies, according to analysts. "At the moment, there is incredible uncertainty surrounding fiscal policy and the potential for stimulus and the composition of that," Mr Paul Ashworth, an economist at Capital Economics, was quoted as saying. "The Fed can't react until it knows what to react to."

US equities opened lower while Asian markets retreated once again yesterday as investors, fretting over the impact of Mr Trump's policies on the global economy, fled for the exits.

The Dow Jones Industrial Average lost 142.09 points to 19,829.04, while the S&P 500 Index lost 10.17 points to 2,270.73 at 11.10am in New York (12.10am Singapore).

Major European stock markets also gave up their earlier modest gains yesterday as stocks on Wall Street slid over the emerging immigration and trade policies from the Trump administration.

In other developments:

• Many US businesses, including major tech giants such as Microsoft and Google, publicly broke with Mr Trump over his anti-immigration policies, saying they could damage competitiveness by limiting access to the best and brightest employees.

• European Union chief Donald Tusk warned that Mr Trump's administration was a "threat" facing the bloc, along with China, Russia and radical Islam.

• Mr Trump's decision to include Mr Stephen Bannon, his top political adviser, on the key committee of the National Security Council set off an uproar among the Washington national security establishment.

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A version of this article appeared in the print edition of The Straits Times on February 01, 2017, with the headline 'US Fed meets amid fiscal policy uncertainty'. Print Edition | Subscribe