No more interest rate cuts! Expectations of an interest rate cut before the end of the year have been ruled out 😭

At today's Federal Reserve meeting, almost all expectations of an interest rate cut before the end of the year have been eliminated from the forward interest rate curve. For the period from November to December, the pricing of the federal funds rate rose from about 4.5% to about 5.2% in just one month. However, the market still generally expects a pause in interest rate hikes, and the probability of a 25 basis point rate hike is only about 10%. However, the market expects that the possibility of the FOMC raising interest rates in July is more than 50%.

Key points to focus on today’s meeting:

1. Will interest rates be raised? Historically, the Fed has never tightened policy when the market probability forecast was less than 65%.

2. How do changes in the SEP (Summary of Economic Projections) and dot plots explain the difference between "skipping interest rate hikes" and "stopping interest rate hikes".

3. How Powell would present his arguments orally at a press conference.

4. How many participants opposed this interest rate decision (if any).