Here comes the Fed …

jerome powell

The Federal Reserve is widely expected to announce in a statement at 2 p.m. ET that it decided to raise interest rates.

After a two-day meeting, the Federal Open Market Committee (FOMC) likely lifted the target range for the federal funds rate by 25 basis points to 1.75%-2%.

It would be the seventh rate hike since late 2015, when the Fed first started the process of lifting interest rates from almost zero. It kept borrowing costs that low after the financial crisis to encourage businesses and consumers to spend and grow the economy.

A decade after the recession, the Fed has made progress on its objectives. The unemployment rate in May was 3.8%, the lowest since 2000 and 1969, while inflation was just below the Fed’s 2% target.

After two rate hikes in 2018, investors are focusing on the Fed’s updated projections for increases during its remaining meetings for the year.

In March, the dot plot, which reflects where voting FOMC members stand, showed an equal split between those who favored three rate increases this year and those who favored four. All it would take to tilt the new dot plot in favor of four rate hikes would be one official changing their opinion.

The dots are anonymous, so we may not know for sure who would be responsible for tipping the scale. However, Deutsche Bank’s Alan Ruskin sees the dot most in the balance as that of Fed Chairman Jerome Powell. “This is a rare occurrence where the chairperson can help influence and shape the overall dot plot message,” Ruskin, the global head of G10 FX strategy, said in a preview.

Powell will face reporters during a press conference at 2:30 p.m. ET. This is partly why a rate hike is expected; the Fed usually only hikes when there are pressers so …read more

Source:: Business Insider


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