Federal Reserve Board Chairman Jerome Powell will announce a decision on interest rates after the two-day Fed meeting, but members have said they will be “patient” (Jim WATSON)

Washington (AFP) – The US Federal Reserve on Tuesday began its second policy meeting of the year but has signaled it will not raise interest rates as the global economy slows.

Members of the interest rate-setting Federal Open Market Committee have said repeatedly since December they will be “patient” before deciding on the next hike in benchmark lending rates.

Following the two-day meeting, Fed Chairman Jerome Powell is due to announce the decision on Wednesday. The federal funds rate — which helps set lending rates throughout the economy — is now in a range of 2.25 to 2.5 percent.

With inflation still tame as US economic growth decelerates in 2019, economists also say Fed policymakers are likely once again to lower the number of rate hikes they expect this year from the two projected in December.

“They still believe in the medium term the economy looks to be in good shape,” Kathy Bostjancic of Oxford Economics told AFP.

She said she expected the Fed to cut the median forecast for rate hikes in 2019 from two to one.

“It’s a close call. We’re seeing at most there would be one rate hike and then that would be it for the cycle.”

Growth in the first quarter of 2019 is widely expected to slow. Oxford Economics forecasts growth of just 0.7 percent, which would be the slowest pace in more than three years.

Job growth halted in February but has maintained a good pace on average and the housing sector shows signs of recovery.

At the same time, manufacturing and consumer spending have fallen off sharply. A major question mark remains the extent of the slowdowns in China and Europe.

But Joseph Gagnon, senior fellow at the Peterson Institute for International Economics, said US growth should be stronger in the rest of the year, meaning it is unlikely the Fed will cut its median forecast for rate hikes in 2019 all the way to zero.

“It would be a big change if they had zero hikes,” he told AFP.

Futures markets put the odds that the Fed will in fact reverse direction and actually cut rates at about one in three in the next 10 months.

The White House reiterated Tuesday it expected another year of GDP growth of three percent or better but the Congressional Budget Office and others expect significantly slower growth.

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