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🔥💥What you need to know before the Fed interest rate decision
The #US Federal Reserve (Fed) will announce its new interest rate decision at 18:00 UTC this evening.
As it will be remembered, the #Fed left rates unchanged at its meeting on January 31. Interest rates in the US are at the highest level in the last 22 years (between 5.25 and 5.50%). Dec. March January, Powell, in his statements, said that they will go to rate cuts in 2024, but for this application, March is too early. Therefore, the markets are not predicting a rate cut for tonight.
According to the figures of the “CME FedWatch Tool”, which uses the prices of term fund contracts and is followed by analysts and economists to predict short-term interest rates, the institution will leave rates steady at a rate of 99% this evening. the probability of a 25 basis point decrease is seen as 1%.
On the other hand, the markets are predicting a 75 basis point interest rate cut for 2024. The rate of discounts starting in June on the CME Watch Tool is seen as 63%. At the beginning of the year, the rate of interest rate cuts starting in March was much higher. However, the higher-than-expected inflation data and Powell's statement that “The numbers are not what we wanted” had reduced this rate to almost zero.
The new dot-plot will also be announced.
A new version of the chart, also known as the “dot-plot”, in which Fed branch presidents and other members state their opinions on the course of interest rates, will also be published tonight. The last chart released in December shows that many members expect interest rates to fall below 5% or even 4.5%. It is also a matter of curiosity where this figure will be tonight... the dot-plot graph is only explained 4 times a year.
As it is known, the Fed states that it is struggling to bring inflation down to the level of 2% in the United States. Although some analysts consider this figure too low, Fed chairman Powell has stated that he wants to see a permanent inflation rate of 2% every time.
