Continuing to increase interest rates as of November 2021, the FED is approaching the end of the cycle, and the impact of interest rate decisions on the markets is increasing.
The FED did not increase interest rates in June and stated that it would continue to determine its monetary policy by adhering to the data, and signaled that two more rate hikes could be made during the year.
Today, the FED will announce the highly anticipated interest rate decision at 21:00 CET (18:00 UTC). FED Chairman Jerome Powell's verbal guidance will be followed at 21:30 CET.
While the market considers the 25 basis point interest rate hike as certain, the statements in the decision text will be decisive for the direction of the markets.
It is expected to emphasize the determination to reach the 2% target in inflation after the Fed's 25 basis point interest rate hike and to emphasize that the rate hikes will be determined from meeting to meeting according to the data.
JP Morgan analysts think that the Fed's decision to raise interest rates by 25 basis points is priced in and the S&P 500 and equity markets could rise with this decision if there is a signal that there may be a pause at the next meeting.
Analysts predict that with a 25 basis point increase, if there is a signal for a continuation of interest rate increases, it could trigger a 1% pullback in stocks.
It is considered as a low probability of 1% that no rate hike will be made at this meeting.
The fact that the inflation data were announced as 3% in June, below the expectations, is the biggest indicator of the cooling in inflation.
The fact that the data in the labor market is not at the desired level causes the FED to maintain its concerns that inflation will rise again.
The Fed had stated in its previous meetings that the effects of interest rate hikes would be seen over a period of time. In this context, it is considered that the implementation of the increase and pause scenario is higher in the next process.
Analysts do not expect a rate cut in the early stages of 2024 before the desired cooling in the labor market.
For Bitcoin (BTC) and risky assets, the statements in the FED's interest rate decision text will be decisive.
Whether the text has changed or not, we will publish the important points in the Fed's interest rate decision and Powell's statements instantly on twitter. Don't forget to follow.
