The Federal Reserve is set to announce its first policy decision of the year at 2:00 p.m. ET.
Investors expect the central bank will announce a 0.25% increase in the range for its benchmark policy rate, marking the second time the Fed slowed down its pace of rate increases in as many meetings.
Fed Chair Jerome Powell is expected to hold a press conference explaining the Fed’s decision at 2:30 p.m. ET on Wednesday.
Ahead of Wednesday’s meeting, several Fed officials have socialized the concept of a 25 basis point rate increase, and investors in turn priced in a nearly 100% chance of this move with today’s announcement.
In Powell’s press conference, investors will be listening closely for clues on whether the Fed has moved any closer to ending its campaign of rate hikes as it works to slow down inflation. In 2022, the Fed raised interest rates by a cumulative 4.25%, its most aggressive annual campaign since the early 1980s.
Federal Reserve Board Chairman Jerome Powell holds a news conference following the announcement that the Federal Reserve raised interest rates by half a percentage point, at the Federal Reserve Building in Washington, U.S., December 14, 2022. REUTERS/Evelyn Hockstein
“Fed Chair Powell will need to acknowledge encouraging inflation data that’s come in,” Wilmington Trust chief economist Luke Tilley told Yahoo Finance last week. “This is not a one off. We have had had three months of encouraging data.”
Tilley thinks despite encouraging inflation data, the Fed will use hawkish language on Wednesday because officials don’t want financial conditions to loosen too much and are still watching wages.
“Powell wants to stay the course and do no harm,” he said.
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