The Federal Reserve will announce its latest monetary policy decision at 2:00 pm ET on Wednesday, and investors expect the central bank to raise interest rates by 0.25% for the second meeting in a row. A quarter point hike would take the policy rate to a new range of 4.75%-5%, the highest since October 2007.
This announcement will come at the end of one of the most uncertain central bank meetings in years, as the Fed seeks to balance inflation that remains well above its target and a banking crisis that has rocked the financial sector.
Data from the CME Group on Wednesday showed investors put a nearly 90% chance that the Fed would raise rates by 25 basis points on Wednesday.
All eyes will be on Fed Chairman Jerome Powell’s press conference, which begins at 2:30 p.m. which remains stubbornly tall.
Since the beginning of March, three banks in the US have failed, and two, Silicon Valley Bank and Signature Bank, have been placed in receivership by regulators. In Europe, the Swiss government has also forced an emergency merger between UBS and Credit Suisse, with UBS subsuming its smaller rival to stabilize the European banking system.
In response to these developments, the Fed has established an emergency credit line to shore up deposits in the US banking system while establishing swap lines with international central banks to ease the global tensions that have arisen. in the last weeks.
On the inflation side, the consumer price index for February showed that so-called “core” inflation, which excludes the cost of food and energy, rose 0.5% from the previous month and 5, 5% compared to last year. Broadly, including food and energy, inflation rose 6% from a year ago in February, three times the Fed’s 2% target.
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