The Fed meeting under the chairmanship of Powell started yesterday evening in the shadow of uncertainties. While many economists expect an increase of 25 basis points, some are of the opinion that the increases should be suspended to support financial stability.
One of the most important aspects of the meeting will be the policy makers' update of their interest rate projections for the first time since December. These forecasts will be an important roadmap as to whether further increases are expected this year. Due to the banking crisis, the median forecast of 5.1 percent for the peak interest rate in 2023 is not expected to rise in the Fed's dot chart projections.
As of Tuesday, the Fed's 25 basis point rate hike was priced at 80 percent in the markets. Thus, the bank is expected to raise the policy rate to the range of 4.75 -5 percent. This is the highest level since 2007.
Still, uncertainties regarding the decision remain high. Investors' and economists' expectations for interest rate hikes declined due to the bankruptcy of 3 US banks in the last 2 weeks and UBS's acquisition of troubled Credit Suisse.
Comments
No comment yet.