Fed Meeting Preview: Powell Prepares to Deliver a Hawkish Pause Next Week
The upcoming week will play a pivotal role in shaping the Federal Reserve's outlook for interest rates. In what is expected to be one of the most important Fed policy decisions of the year, the U.S. central bank is widely expected to pause its rate hiking campaign at the conclusion of its FOMC meeting on Wednesday at 2:00 PM ET.
Financial markets are currently pricing in a 98% chance of the Fed holding interest rates at current levels, according to Investing.com's Fed Rate Monitor Tool.
If the Fed does, in fact, skip further tightening next week, it will leave the benchmark Fed funds target range in a range between 5.25% and 5.50%, which is the highest level since January 2001.
Beyond the expected rate decision, all eyes will be on Fed Chair Jerome Powell, who will speak shortly after the release of the FOMC statement, as investors look for fresh clues on how he views inflation trends and the economy.
Policymakers will also release new forecasts for interest rates and economic growth, known as the ‘dot-plot,’ as investors grow increasingly uncertain over the Fed’s monetary policy plans through the end of the year and beyond.
While I expect the Fed to remain on hold next week, the accompanying policy statement will make sure to let everyone know that November could very well bring about another rate hike.
In addition, Powell will likely signal that further tightening will be necessary while stressing that the decision will remain data-dependent and that the U.S. central bank remains strongly committed to bringing inflation back down to its 2% goal.
As such, I would not be surprised to see most officials continue to project at least one more rate hike by year-end in their updated 'dot plot’ projections.
That being the
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