Washington, September 20--The Federal Reserve, according to many analysts, will take another small step this week toward raising interest rates to more normal levels, but may be getting rates up to a point that allows for a pause in increasing them.
Fed officials meet on Tuesday and are widely expected to raise overnight borrowing costs, which influence rates across the economy, by a quarter-percentage point to 1.75 percent.
It would mark the third small rate increase since the Fed began tightening monetary policy in June.
While the U.S. economy lost some momentum in recent months, Fed policymakers have expressed confidence it has entered a self-sustaining expansion and no longer needs the ultra-low rates that were used to battle recession and a weak recovery.
When Fed officials last met on Aug. 10, they expressed confidence an economic soft patch would be prolonged and said they expected to continue raising rates at a measured pace.
Since then, Fed chief Alan Greenspan has said the economy is already on firmer ground. "The most recent data suggest that, on the whole, the expansion has regained some traction," he told Congress.
Markets are betting rates reach 2 percent by the end of the year, a forecast that implies the Fed takes a breather at one of its last two meetings of the year -- Nov. 10 or Dec. 14.
