Fed is set to raise rates this week despite political tumult
If nothing else, the political fights and uncertainty in Washington — over investigations into Russia's ties to President Donald Trump's campaign, health care legislation, tax cut proposals and about whether Congress will raise the nation's borrowing limit and pass a new budget — could lead the Fed to raise rates more slowly than it otherwise would.
The CME Group's tracking gauge shows that market traders see a 96 percent probability that the Fed this week will raise its target for the federal funds rate — the interest that banks charge each other — from a range of 0.75 percent to 1 percent to a range of 1 percent to 1.25 percent.
The Fed had kept its benchmark rate at a record low near zero starting in late 2008 to try to boost consumer and business borrowing and lift the country out of the worst downturn since the 1930s.
Fed officials have said they think the economy, now entering its ninth year of expansion, no longer needs the ultra-low borrowing rates they has been supplying.
Besides stepping up its pace of rate increases, the Fed has also signaled that it's pondering a plan to begin reducing its enormous portfolio of bonds.
In a statement the Fed will release Wednesday — and in a news conference by Chair Janet Yellen to follow — officials may begin to disclose details of how they will begin to pare the bond portfolio, likely by slowing the reinvestment of maturing bonds.