US Fed Meeting News Live Today: The US Fed FOMC is to announce rate hike decision shortly
Markets are cautiously awaiting the 12.30 AM (IST) release of the FOMC’s Summary of Economic Projections (SEP) followed by Chair Powell’s presentation 30 minutes later.
José Torres, Senior Economist at Interactive Brokers has a message for investors and traders – Investors are anticipating five cuts to the Fed Funds rate next year.
If today’s SEP, or dot plot, portrays expectations among policymakers for only two cuts next year, Powell will have to explain why the Fed believes extended monetary policy tightening is needed.
Additionally, markets are likely to respond with increased volatility as corporate earnings expectations and equity valuations currently reflect a very dovish Fed in 2024.
In contrast, a dot plot that is consistent with investors’ expectations and a quiet day for climate protestors could give Powell a break and cause equities to surge upward today. Given the strength and velocity of the rally, however, the former case is more likely as further upside in stocks is difficult to envision.
The Federal Reserve policy meeting and, in particular, Chair Jerome Powell’s news conference will be the center of attention.
At a 22-year high, the US interest rate is currently between 5.25% and 5.5%.
Today also sees the publishing of the Summary of Economic Projections. The Fed’s “dot plot” will reveal how it defines its rate policy projection for next year and 2025.
Traders will be watching Fed Chair Jerome Powell’s speech for signs on when rate cuts can be expected in 2024.
The November CPI was 3.1%, down from 3.2% in October. Higher-for-longer may be the FED’s mantra until inflation falls below the 2% objective.
Only time will tell whether the Fed cuts rates by 50 basis points or 125 basis points in 2024, as the market anticipates.
In 2023, the S&P 500 has risen about 20%, while the tech-heavy Nasdaq 100 has gained nearly 47%.
In the United States, annual inflation declined to 3.1% in November 2023, the lowest amount in five months, from 3.2% in October.
Core inflation remained sticky, with the annual core rate remaining at 4% and the monthly rate rising to 0.3% from 0.2%.