Markets still expected the Federal Reserve to raise interest rates by a quarter point on Wednesday, the 11th increase since early 2022 and the highest level in 22 years despite an improving inflation picture.
The decision will be announced by the Federal Open Market Committee (FOMC) at 2:00 pm local time in Washington. A press conference with Chair Jerome Powell is scheduled for 30 minutes from then.
Investors will be looking to Powell for a picture of how serious the Fed is about raising rates again in 2023. Despite the FOMC’s June projection of one more rate hike before the end of the year, investors consider Wednesday’s decision as all but certain in light of the recent easing of inflation pressures.
Whether the FOMC believes it has done enough to combat harmful inflation is the most important issue at hand.
The market is anticipating that this will be the final one for a while.
According to Charles Schwab’s chief fixed-income strategist Kathy Jones: “The signal will probably be, yes, we’re hiking, but then we think we can sit here a while and see.” However, Jones said she cannot make any guarantees, since the Fed has to keep the choice open.