Reserve

Jerome Powell

Chair

Wednesday

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<p class="has-drop-cap">The Federal Reserve is set to reveal its latest decision on interest rates on Wednesday. Market observers largely anticipate that the rates will remain steady, consistent with the outcomes of the last three meetings. Still, all eyes will be on Chair Jerome Powell’s speech for clues on the timing of the first rate cut.</p>
<h3 id="expectations-for-fed-s-jan-31-meeting">Expectations for Fed’s Jan. 31 Meeting</h3>
<p>Since March 2022, the US central bank has implemented 11 rate hikes to rein in the 4-decade high inflation. By bringing the rates to the highest range since 2001, it is safe to say that Jerome Powell and Fed policymakers have managed to steadily bring down the annual inflation rate, which stood at 3.4% in December.</p>
<p>Other recent <a href="https://tokenist.com/us-economy-grew-faster-than-expected-in-q4-raising-hopes-for-a-soft-landing/" rel="noopener noreferrer nofollow" class="deco-link">economic data</a>, including the <a href="https://tokenist.com/decembers-core-pce-meets-expectations-soft-landing-in-focus/" rel="noopener noreferrer nofollow" class="deco-link">Personal Consumption Expenditures (PCE) price index</a> – the Fed’s preferred inflation gauge – have also confirmed that higher-priced pressures are easing. Moreover, the <a aria-label="ADP reported (opens in a new tab)" href="https://www.cnbc.com/2024/01/31/adp-jobs-report-january-2024-.html" target="_blank" rel="noopener noreferrer nofollow" class="deco-link">ADP reported</a> that private payroll growth slowed to 107,000 in January, falling short of the 150,000 forecast by economists surveyed by Dow Jones. This deceleration in January 2024 also came under the revised December figure of 158,000.</p>
<p>While the Federal Reserve will almost certainly keep interest rates unchanged at today’s meeting, investors hope Powell will offer more insights into the bank’s path ahead. The market wants to hear when it can expect the first-rate cut.&nbsp;</p>
<p>The central bank’s chair may take a hawkish approach if policymakers plan to delay rate cuts until after March. This would provide flexibility in policy decisions, considering market expectations of early rate cuts in March. To signal an active March FOMC meeting, Powell may choose not to provide a specific timeline for the initial rate cut.&nbsp;</p>
<p>According to <a aria-label=" (opens in a new tab)" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html" target="_blank" rel="noopener noreferrer nofollow" class="deco-link">Fed futures pricing data</a>, the likelihood of a first rate reduction in March is currently 59.8%, while the odds of policy rates remaining unchanged at that meeting are 37.6%.&nbsp;</p>
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<h3 id="market-reaction">Market Reaction&nbsp;</h3>
<p>The markets’ reaction ahead of the Fed’s Wednesday meeting is mixed.</p>
<p>When writing, the S&amp;P 500 index was down 0.6% at 4,893, retreating from a recent rally to an all-time high. <a href="https://tokenist.com/with-rut-lagging-behind-spx-these-small-cap-stocks-have-potential/" rel="noopener noreferrer nofollow" class="deco-link">Russell 2000 index</a>, which tracks small-cap US equities, fell to 0.57% to 1,984 at the market open.</p>
<p>Treasury bond yields were also down, with the 10-year and 2-year notes sliding to 3.94% and 4.19%, respectively. Meanwhile, spot gold climbed roughly 0.9% to $2,054, while the US dollar index slipped 0.5% to 102.9.</p>
<p>Brent and WTI crude dropped to $82.3 and $77.2 on the day, respectively.&nbsp;</p> <iframe src="https://tokenist.substack.com/embed" width="100%" height="320" style="border:1px solid #EEE; background:white;" frameborder="0" scrolling="no"></iframe>
<p><em><strong>Do you think the Federal Reserve will opt for early rate cuts and initiate its dovish pivot in March? Let us know in the comments below.&nbsp;</strong></em></p>
<p><em>Disclaimer: The author does not hold or have a position in any securities discussed in the article.</em></p>
<p>The post <a rel="noopener noreferrer nofollow" href="https://tokenist.com/fed-meeting-preview-investors-eager-for-rate-cut-clues/">Fed Meeting Preview: Investors Eager for Rate Cut Clues</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://tokenist.com">Tokenist</a>.</p>

Fed Meeting Preview: Investors Eager for Rate Cut Clues

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