Markets have priced in a slower pace of rate hikes from the US Federal Reserve, with a 25 basis point increase likely at the meeting later on Wednesday.
The Fed will announce its latest interest rate decision on Wednesday at 2:00 p.m. ET, and Fed Chair Jerome Powell will address the media at 2:30 p.m. ET. After a half-point increase in December, the next anticipated hike in the federal funds target rate range would be a quarter point, making it the lowest increase since the first hike of the cycle in March.
Even though the meeting isn’t expected to change much, the reaction from the markets could be challenging for the Fed chairman to handle, according to analysts. Markets have been surging on hopes that the central bank can bring the economy to a soft landing while also putting an end to inflation to allow for a return to softening policies.
If the Fed raises interest rates again on Wednesday, it will be the eighth time since March. The resulting range for the Fed Funds Target Rate would be between 4.50% and 4.75%. It’s within half a percentage point of the final rate range predicted by the Fed, which is between 5% and 5.25%.