US Fed to open policy meeting

Washington: The US central bank is set to open its final two-day policy meeting of the year on Tuesday, and is likely to raise the benchmark interest rate despite the absence of inflation.

It would be the third rate hike this year, and possibly the final time Federal Reserve Chair Janet Yellen presides over a policy move since President Donald Trump has opted to replace her in February.

Analysts say the booming labor market, which in recent months has pushed the unemployment rate down to 4.1 percent, the lowest in 17 years, will outweigh the Fed´s perplexity over why inflation has stayed stubbornly below the central bank´s two percent target.

And with Republicans in Congress working to finalize a unified final version of a massive tax overhaul that will slash corporate taxes, central bankers likely will be thinking about the measure´s potential to add fuel to the economy and finally ignite price increases, economists say. "Labor markets and prospects of fiscal stimulus outweigh soft inflation" in the rate decision, Barclays said in its Fed outlook note.