FOMC Watch, Federal Reserve Expected To Keep Rates On Hold
The United States (US) Federal Reserve (Fed) will announce its monetary policy decision after its first policy meeting of the year on Wednesday. Market participants widely anticipate that the US central bank will leave its monetary policy settings unchanged after cutting interest rates by 25 basis points (bps) to 4.25%-4.5% in December.
The CME FedWatch Tool shows that investors see little chance of a rate cut in January, while pricing in a 33% probability of a 25 bps cut in March. Therefore, Fed Chair Jerome Powell's remarks and comments could drive the US Dollar (USD) valuation, rather than the rate announcement.
"The FOMC is widely expected to keep its policy stance unchanged at 4.25%-4.50% next week, with Chair Powell expected to communicate what is likely to be a cautious process for near-term policymaking, while still supporting an easing bias," said TD Securities analysts who previewed the Fed event. "In our view, Fed officials' decisions, while still heavily data-dependent, are increasingly dependent on Trump," he added.
Source: FXStreet
