The much-anticipated monetary policy decision on benchmark interest rates is set to be unveiled by the Jerome Powell-led US Federal Reserve, also known as the Federal Open Market Committee (FOMC), on Wednesday. Despite expectations, Fed policymakers have hinted that a reduction in key US interest rates may not occur in their first meeting of the year, with economists projecting a potential wait until June. This cautious approach is influenced by the ongoing strength in household spending and uncertainties surrounding the economic outlook.
Since July of the previous year, the Fed has maintained the benchmark overnight interest rate within the 5.25%–5.50% range. Recent data from the US Commerce Department reveals a 2.6% increase in inflation in December compared to the previous year. However, the underlying inflation, on both a six-month and three-month annualized basis, is currently below the central bank’s 2% target.
In the wake of these developments, traders are showing a slight preference for the Fed’s April 30-May 1 policy meeting over the March 19-20 meeting as the potential starting point for a series of rate cuts in the coming year. Stay tuned for the latest updates on the Fed’s monetary policy decisions and their impact on the financial landscape.
