Federal Reserve Expected to Deliver Interest Rate Decision

Federal Reserve Expected to Deliver Interest Rate Decision

Today, the Federal Reserve is expected to release the interest rate decision, which can decide the future of the economy. The FOMC is scheduled to hold a meeting and vote for the alteration of the federal funds rate at 5.00%. Speculations regarding the move are rife as the analysts are in two minds about what to expect.

A rate hike would be dollar-positive because investors are always seeking to maximize returns and will turn toward stable, relatively safe havens like the dollar. Should rates be cut, this might weaken the dollar because, after all, a more dovish stance would represent the opposite end of the interest rate spectrum.

If the rates are constant, then market observers may then concentrate on voting patterns and what FOMC members comment on, studying this detail to predict future directions for policy. The post-meeting FOMC minutes may give more in-depth information about individual opinions, which can point toward the possibility of changing the rates in the future when the economy is faced with further challenges.

FOMC News Conference Expected to Give Hints  on Future Monetary Policy

FOMC will host its regularly scheduled quarterly news conference today at 19:30 GMT. The event is seen to attract much attention as inflationary pressures are on a rising trend and market sentiments are changing with one economic indicator after another showing different trends. Analysts would expect the FOMC members to be challenged with questions on U.S. monetary policy, possible measures to control inflation rates, and interest rate hiking possibilities.

Indirect hints in the direction of future rate decisions may also be gleaned from rhetoric from FOMC speakers. If such hints point toward a rise in rates, the dollar tends to go up because the markets would interpret this as a tighter monetary stance. Conversely, the dollar is weak when the outlook appears dovish and markets speculate that the Fed continues to ease its stance on inflation management.

Analysts and economists would be watching every word of the FOMC for a tone of vocabulary for probable inside looks into the Fed's way in the near months.