After the Fed’s likely rate hike this week, all bets are off

In this Thursday, Nov. 29, 2018, file photo Federal Reserve Chairman Jerome Powell waits to address the Federal Reserve Board's 15th annual College Fed Challenge Finals in Washington. The Federal Reserve says that the U.S. economy was growing in the fall, but there were concerns about higher tariffs from a widening trade war, rising interest rates and tight labor markets. In its latest report on economic conditions around the country, the Fed says most of its 12 regions saw moderate growth through late November. Dallas and Philadelphia says growth had slowed while St. Louis and Kansas City depicted growth as slight. (AP Photo/Cliff Owen, File) In this Thursday, Nov. 29, 2018, file photo Federal Reserve Chairman Jerome Powell waits to address the Federal Reserve Board's 15th annual College Fed Challenge Finals in Washington. The Federal Reserve says that the U.S. economy was growing in the fall, but there were concerns about higher tariffs from a widening trade war, rising interest rates and tight labor markets. In its latest report on economic conditions around the country, the Fed says most of its 12 regions saw moderate growth through late November. Dallas and Philadelphia says growth had slowed while St. Louis and Kansas City depicted growth as slight. (AP Photo/Cliff Owen, File)

By Associated Press December 18, 2018 6 min read

WASHINGTON (AP) – Having raised interest rates with steady regularity in recent months, the Federal Reserve may embrace a new message this week: Flexibility.

On Wednesday, the Fed is set to announce its fourth rate hike of the year. But after this week, no one is sure what it will do. Neither, most likely, is the Fed itself.

A confluence of factors – a global slowdown, a U.S.-China trade war, still-mild inflation, stomach-churning drops in stock prices – may have left Fed officials weighing a shift in policy. Many analysts think the Fed will signal Wednesday that it’s considering whether to slow or suspend its rate hikes in 2019 to avoid weakening the economy too much. And some predict that the rate increases, which began three years ago, will end altogether next year.

Wall Street plunged again on Monday, pushing stocks to their lowest levels in more than a year. The Dow Jones industrial average fell 507 points after a 496-point drop on Friday as investors appeared to be losing confidence in the U.S. economy’s growth prospects as global growth has shown more signs of weakness.

In September, Fed officials collectively forecast that they would raise rates three times in 2019. But this week, in the view of many analysts, the central bank could indicate that no more than two rate hikes are likely next year.