What To Expect At The Upcoming Fed Meeting

Video Length: 00:07:30

On the latest edition of Market Week in Review, Senior Investment Strategist Paul Eitelman and Sophie Antal Gilbert, head of AIS business solutions, discussed what to expect at the U.S. Federal Reserve (the Fed)’s next policy meeting. They also chatted about the impact of recent Brexit developments on financial markets and dug into the latest data on eurozone industrial production.

All eyes on Fed rate outlook at mid-week meeting

The Fed convenes March 19-20 for its next monetary policy meeting, Eitelman said, noting it’s pretty much a slam-dunk that the central bank will keep interest rates unchanged. “The Fed has been overly clear about its intent to pause its rate-hiking cycle,” he said, “so the importance of the meeting, from a market perspective, will revolve around guidance from the central bank on how long the pause may last.”

At the conclusion of the meeting, the Fed will release an updated set of interest-rate projections, and markets will gain a better sense of how many FOMC (Federal Open Market Committee) members favor another rate increase this year, Eitelman said. “This, combined with Chair Jerome Powell’s press conference after the meeting, should paint a more comprehensive picture of how significant the central bank’s recent shift in monetary policy has been,” he stated.

The Fed signaled a pause in rate hikes at its last meeting for three main reasons, Eitelman said:

  • The sell-off in markets during the fourth quarter of 2018
  • A slowdown in the global economy
  • Sluggish inflation

Markets have responded by generally posting strong gains, he noted, while tentative signs have also emerged that global economic growth may be on the upswing. Meanwhile, inflation has generally remained weak, Eitelman said—as evidenced by a 1.5% year-over-year increase in the Labor Department’s Consumer Price Index in February. This suggests that the Fed’s primary inflation indicator, the core personal consumption expenditures price index, may come in below the central bank’s 2% target.

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