US Markets
Wednesday, November 1st, 2023 2:06 pm EDT
Key Points
- The Federal Reserve is expected to keep interest rates unchanged in its upcoming meeting, with little chance of a policy move. Recent economic data has given Fed officials time to assess their next steps, as inflation, while slowing, remains high, and the economy is growing steadily despite historically high benchmark interest rates.
- Investors will be closely monitoring the signals coming from Fed Chair Jerome Powell and the Federal Open Market Committee (FOMC) regarding their future intentions. The messaging from Powell is crucial, as markets have been sensitive to the potential impact of higher interest rates on the economy.
- The meeting coincides with other significant economic events, including the Treasury Department’s disclosure of its funding needs, the Labor Department’s report on job openings, and the ADP estimate of private payroll growth. While the Fed is likely to maintain a cautious tone and hold rates steady, some market participants believe that the Fed may need to raise rates again due to persistent inflation, although the timing remains uncertain. Powell’s post-meeting comments are anticipated to be more market-moving than the FOMC statement, and the market currently sees a minimal chance of a rate hike at this meeting.
The Federal Reserve is expected to maintain the status quo in its upcoming meeting, with no anticipated changes to interest rates. Recent economic data has provided the Fed with time to make its next move. Inflation, although slowing, remains elevated, and the economy is growing steadily despite having the highest benchmark interest rates in years. Investors are closely watching for signals from Fed Chair Jerome Powell and the Federal Open Market Committee (FOMC) regarding their future plans.
The key focus is on the messaging from Powell and the FOMC, as markets have been sensitive to the potential impact of higher interest rates on the economy. Stock markets have been volatile in recent months, and Treasury yields have reached multi-year highs. Powell aims to balance the fight against inflation with the need to support economic growth. The post-meeting news conference and the FOMC statement could significantly influence markets.
Additionally, the Treasury Department will release information about its funding needs, and the Labor Department will report on job openings and private payroll growth. These events occur in the context of an upcoming nonfarm payrolls report for October and a recent report indicating better-than-expected economic growth in the third quarter.
The Fed is expected to maintain current interest rates and proceed cautiously, given the rise in long-term rates in the Treasury market. Powell is likely to reiterate the Fed’s cautious approach and its focus on inflation. The market is pricing in minimal chances of a rate hike at this meeting and only a modest probability for an increase in December. Some market participants believe the Fed may need to make another rate hike due to persistent inflationary pressures, but it is uncertain when such a move might occur. The Fed is expected to emphasize that rate cuts are not imminent, with any easing potentially taking place in the second half of 2024.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/10/31/heres-everything-to-expect-from-the-federal-reserve-meeting-wednesday.html
