Here's everything the Federal Reserve is expected to do Wednesday
On the heels of a 10-meeting streak of raising interest rates, the Federal Reserve on Wednesday is expected to take a break and let the U.S. economy catch its breath.
Markets are pricing in a high probability that central bank policymakers will «skip» — an expression they generally prefer to «pause» — at this month's meeting as they digest the impact of 5 percentage points worth of increases going back to March 2022.
That doesn't mean this will be the end of the hikes. It just means that with the pace of inflation waning, officials could feel this is a good time to evaluate.
«They've kind of set things up for a pause,» said Bill English, a former Fed official and now a finance professor at the Yale School of Management. «So they'll probably pause, but I think they'll very much want to avoid an outcome in markets where investors say, 'Hurrah! The tightening cycle is over.'»
Indeed, there will be a lot of moving parts in Wednesday's Fed action. Here's a look at what to expect.
If the rate-setting Federal Open Market Committee does choose to pause, that will leave the benchmark borrowing rate in a target range between 5% and 5.25%.
In the market's eyes, Tuesday's consumer price index report, which showed the 12-month inflation rate falling to a two-year-low of 4%, cemented that decision.
However, the post-meeting statement could be massaged in a way that markets don't assume that policymakers have gone quiescent on inflation and are set on halting the rate-hiking cycle.
«This could be a one-sided communication that they're leaning in the direction of raising rates, but they're not ready to commit just yet. They want some more information on how things are going,» English said. «A hawkish pause, if you like, is something
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