Fed set to hold rates steady, remain on track for more hikes

WASHINGTON: The Federal Reserve is expected to keep interest rates unchanged on Wednesday, but solid economic growth combined with rising inflation are likely to keep it on track for another two hikes this year even as President Donald Trump has ramped up criticism of its push to raise rates. 

The U.S. central bank so far this year has increased borrowing costs in March and June, and investors see additional moves in September and December. Policymakers have raised rates seven times since December 2015. 

The Fed will announce its decision at 2 p.m. EDT (1800 GMT) on Wednesday. No press conference is scheduled and only minor changes are anticipated compared with the Fed's June policy statement, which emphasized accelerating economic growth, strong business investment and rising inflation. 

"They've got expectations pretty much where they want them," said Michael Feroli, an economist with JPMorgan. "They may need to finesse how they word the language on inflation, but I think the ultimate message is going to be the same." 

The U.S. economy grew at its fastest pace in nearly four years in the second quarter as consumers boosted spending and farmers rushed shipments of soybeans to China to beat retaliatory trade tariffs, Commerce Department data showed on Friday. 

The Fed's preferred measure of inflation - the personal consumption expenditures (PCE) price index excluding food and energy components- increased at a 2.0 percent pace in the second quarter, the data also showed. The latest monthly figures released on Tuesday showed prices in June were 1.9 percent higher than a year earlier. 

The core PCE hit the U.S. central bank's 2 percent inflation target in March for the first time since December 2011. 

U.S. labor costs, a key measure of how much slack is left in the market, posted their largest annual gain since 2008 in the second quarter, the Labor Department said on Tuesday.