Decoding the thinking of the Federal Reserve is this week’s top task for the financial markets. <br /><br /> On Tuesday, policymakers at the US central bank started a two-day meeting at which they could announce an increase in the cost of borrowing, but few on Wall Street expect them to raise interest rates this month.<br /><br /> The wording of the Fed’s statement at the end of the meeting on Wednesday will be closely studied for clues on the timing of the next hike. <br /><br /> The factors that influence the Fed are employment and inflation – both of which are rising in the US. Growth too has improved, with the US economy accelerating at a 2.9 percent annual pace in the third quarter after a fairly sluggish first half.<br /><br /> That led three members of the decision making committee to call for an interest rate hike at their last meeting back in September. <br /><br /> Low profile ahead of the election<br /><br /> Most bets are on December for the next increase given that this week’s meeting comes just days before the presidential election.<br /><br /> The conventional wisdom is that the central bankers will want to keep a low profile.<br /><br /> As economist Michael Feroli, a former Fed employee now working as an analyst for the bank JPMorgan, said: “It’s widely understood that it would be politically treacherous for the Fed to hike just before a very heated election.”<br /><br /> And whoever wins would also have an impact on the Fed’s decision in December. <br /><br /> Alan Blinder suggests 2 reforms to the Federal Reserve – and 4 “anti-Fed” ideas the next president should oppose: https://t.co/sl7kOPUcit— Brookings Econ (@BrookingsEcon) November 1, 2016<br />
