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Fed expected to raise rates as U.S. economy flexes muscle

´╗┐The Federal Reserve is expected to raise interest rates for the second time in three months on Wednesday, encouraged by strong monthly job gains and confidence that inflation is finally rising to its target. A rate hike at the conclusion of the Fed's latest two-day policy meeting is already baked into bond yields and financial markets overall, with investors putting the likelihood of such a move at 95 percent, according to CME Group's FedWatch program. Attention is turning instead to whether the U.S. central bank will signal an even faster pace of monetary tightening this year than the current three rate hikes that it projected at the December policy meeting."Expectations have some catching up to do regarding the Fed's need to 'lean into the wind' of rising inflation, strong growth, robust sentiment, easy financial conditions, and the likelihood of fiscal stimulus in 2018," analysts from Goldman Sachs wrote ahead of the meeting. They said they regarded a fourth rate increase this year as a "close call."

A rate increase on Wednesday would push the Fed's target overnight lending rate to a range of between 0.75 percent and 1.00 percent, still low but approaching the range that the central bank has typically operated within. The Fed is scheduled to release its latest policy statement along with updated economic forecasts at 2 p.m. EDT (1800 GMT). Fed Chair Janet Yellen is due to hold a press conference half an hour later.

The U.S. economy has flexed its muscle in recent months, with job gains above 230,000 in both February and January. Consumer confidence also has risen and inflation has been firming. Fed policymakers are also pleased by an improving global economic outlook, with euro zone growth edging up and China looking more stable than a year ago. Over the past two years Fed policymakers had worried that a weak global economy would limit U.S. growth and hold down inflation, leaving no compelling reason to raise rates. The Fed's growing comfort with the economic outlook does not mean it will tighten monetary policy faster than planned.

The solid U.S. job gains have had little impact of late on the unemployment rate, indicating that there may be more sidelined workers ready to reenter the labor force as jobs become more plentiful. That has been a key goal for Yellen and one that may keep the Fed on the "gradual" rate hike path it has committed to in prior policy statements, said Beth Ann Bovino, U.S. chief economist for S&P Global Ratings."If the incoming data show the economy heating up faster than we expect, the Fed may want to do more," Bovino wrote in a recent analysis. But "the fact that more folks are coming into the labor force may dissuade the Fed" from moving faster than currently anticipated.

Mini boss says UK production not essential to brand

´╗┐Building in Britain is not essential to BMW's (BMWG. DE) Mini brand as most customers do not know where the compact cars are built and its new electric model could be made elsewhere, the brand's boss told Reuters on Tuesday. Peter Schwarzenbauer said the German carmaker would decide by the end of 2017 whether to build the new electric model at an existing site in Britain or the Netherlands, or whether to pick a new location. The BMW board member said the possibility of post Brexit tariffs was "only one point ... when you have to decide where to produce a car" and the first question was where the model would be primarily sold. But asked whether it really mattered to British or foreign buyers that the Mini, sometimes sold with the image of the union flag on the roof, is made in Britain, Schwarzenbauer said: "No.""The brand being perceived as British, that's important but this does not mean necessarily that you have to produce it (in Britain).

"Most people don't know where the cars are produced," he said. Mini makes around 70 percent of its 360,000 cars at its southern English Oxford plant but there are concerns that uncertainty over Britain's future trading relationship with the EU could hurt the UK car industry, reliant on tariff-free trade.

Prime Minister Theresa May has said Britain will leave the EU's single market and could also exit the customs union but she would seek to maintain the best possible access to the EU, the British car sector's biggest export market. Schwarzenbauer also noted elections in the Netherlands, where nationalist leader Geert Wilders is neck-and-neck with the Conservative prime minister ahead of polls next week, but said politics was only one factor in the decision-making process. BMW is considering how many electric models might be sold in Europe or the United States, he said, and the firm constantly reassesses its global sites especially when it commits to new models to take into account a whole range of factors.

"As soon as you have bigger investments coming, you have to reevaluate and it's not only in our Oxford