U.S. Federal Reserve Chairman Janet Yellen holds a news conference to announce raised interest rates in Washington, in this file photo taken December 16, 2015. REUTERS/Jonathan Ernst
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WASHINGTON: The financial world is awaiting the Federal Reserve's response to a critical question: How stable are the world's economies and financial markets? Whatever picture the Fed sketches will help shape expectations of when it will resume the interest rate increases it began in December. That's when the Fed raised its key rate from record lows to reflect an economy finally strong enough to withstand higher loan rates six and a half years after the Great Recession ended.Most Fed watchers think the central bank wants more time to assess the financial landscape.Inflation has been stuck below the Fed's 2 percent target rate for nearly four years.Before further raising rates, the Fed wants to see more evidence that inflation is picking up.In December, when the Fed raised rates for the first time in nearly a decade, it signaled the likelihood of four additional hikes in 2016 .That could force the Fed to raise rates faster than it wants and potentially trigger another recession.
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