- Home
- >
- Market Rumours
- >
- FED will be the main market mover this week, what can we expect
FED will be the main market mover this week, what can we expect
Rating:
Loading...Next week's Fed meeting will have a lot of moving parts: a decision on whether to hike rates, the likely beginning of the balance sheet unwinding and an update on how economic growth is likely to trend.
One factor, though, could stand out: The so-called dot plot, which charts where individual Fed members expect interest rates to be over the next few years. Policymakers update the chart every quarter, and market participants watch it closely for expectations on monetary policy.
Until recently, the market thought it had the Fed figured out. With economic growth stable, the unemployment rate continuing to come down and inflation trending toward the 2 percent target, the Fed likely would continue on a path of steady, gradual rate increases.
Here's what the dot plot looked like after the June meeting:
Like many Fed watchers, Caron indeed is expecting the path to move downward. That would reflect a feeling that rates won't be going up as much as the Fed believes. Current projections have the benchmark funds rate hitting 3 percent in 2019, a measure that also is considered the "long-run" rate that would be neither stimulative nor restrictive.
"I don't believe that FED will reach 3% interest rate until 2019" said Jim Caron from Morgan Stanley.
Earlier this week, anticipation grew that the Fed might approve a rate hike at the December meeting because the consumer price index rose to a 1.9 percent annualized rate. The current probability of a hike then is 57.5 percent, up sharply from just 31 percent a week ago, according to the CME.
The FOMC is highly unlikely to do anything with rates at this meeting, but it could tip its hand in the post-meeting statement.
Source: Bloomberg Pro Terminal
Trader Bozhidar Arabadzhiev
Varchev Traders Read more:
If you think, we can improve that section,
please comment. Your oppinion is imortant for us.
