FOMC Rate Decision:1900GMT/14000EST /Fed Chair Powell Conference: 1930GMT/1430EST
The Federal Reserve is set to have its first monetary policy meeting of the year, and it is expected that the central bank will stay dovish, and officials will probably note signs of slowing in the economy since the December meeting.
Around two weeks ago, the markets started pricing in chances of a rate hike coming earlier than 2024 instead of in the second half of 2023. It came following the effect of Biden’s announced massive stimulus program of some $1.9 trillion, given its expected impact on raising inflationary levels. However, we are sure the FOMC will want to quickly manage these expectations and throw a dampener on any chance of sooner rate hikes.
Fed policymakers are aware that costs for many goods and services will likely jump this year, a bitter pill for consumers when the likes of gasoline, travel, and other prices start to pick up from the sharp declines seen last year. But, Fed officials noted that this part of getting back to the norm and not the start of a more persistent inflation problem. It is also important to note that the FOMC clearly noted back when they announced their strategy change in September that they are prepared to allow inflation to overshoot their targets.
Reaction: We are personally looking for a real clear dovish tone from the central bank, which should add some further pressure back on to the greenback.
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