U.S. Fed poised for smaller rate hike with eye on wage growth

The Fed has raised interest rates six times this year, including four bumper 0.75-point increases, bringing the rate to between 3.75% and 4%

The U.S. Federal Reserve is poised to slow its interest rate hikes next week, economists say, as central bankers' most forceful moves in decades to fight inflation ripple through the economy.

But the half-point jump analysts expect to see in the Fed's benchmark lending rate will still be a steep rise, as it struggles to cool demand in the United States to bring consumer costs down.

Households in the world's biggest economy have been contending with red-hot prices, with conditions worsened by surging food and energy costs after Russia's invasion of Ukraine.

To make borrowing more expensive, the Fed has raised interest rates six times this year, including four bumper 0.75-point increases, bringing the rate to between 3.75% and 4%.

"We think the stage is set for a (half-point) hike this month," said Oren Klachkin of Oxford Economics, as sectors sensitive to interest rates like housing reel and inflation shows signs of easing.

The decision will be announced after a two-day meeting of the policy-setting Federal Open Market Committee (FOMC) starting Tuesday.

Policy makers are keeping a close eye on wage growth, given concerns that higher salaries will add to inflation pressures.