Fed policy meet begins today: How will the US Fed interest rate decision impact the stock market?

livemint.com:

US Federal Reserve will opt to maintain its current interest rates during the meeting on September 19-20 despite persistent inflation levels exceeding the central bank's target range while the US economy remains resilient. The two-day Federal Open Market Committee (FOMC) meeting begins today (September 19) and its outcome is due on Wednesday (September 20). The US Fed has been raising rates since March 2022 and this could be the second time since then that the Fed may maintain a pause on interest rate hikes.

While a pause seems highly likely, the possibility of a rate cut is extremely feeble at this juncture. Markets across the globe will closely watch what the US Fed Chairman Jerome Powell says about inflation and the US economy. The Fed is expected to maintain a status quo on rates in September but experts see a possibility of one rate hike in the coming policy meetings.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services believes the Fed will likely hold rates this time but the tone of the Fed commentary will likely be a bit hawkish since inflation continues to be high despite some easing. Vijayakumar anticipates one more rate hike of 25bps in the next meet and a hold thereafter. "The Fed always responds to incoming data.

However, the current trend indicates the possibility of a rate cut only by the second quarter of the next year (Q2CY24)," said Vijayakumar. Madhavi Arora, Lead Economist at Emkay Global Financial Services, has a similar view. "We are not expecting any action from the Fed amid incipient signs of a cooling labour Market and demand-led inflation, but expect them to keep one more hike intact in the dot chart and sound cautious and data-dependent," said Arora.