.png)
Will the market be happy or unhappy with Fed Chairman Jerome Powell's decision on interest rates? Will the Fed chairman cut rates by 0.25% or 0.50%? How will Powell's commentary be? Will he admit that the economy is in recession or not?
These are some of the questions that will be answered tonight. Today's Fed meeting will be the biggest Fed meeting of the year.
Following the conclusion of today's meeting, the Federal Reserve will have two additional occasions to evaluate potential adjustments to interest rates in 2024. The upcoming meetings of the Federal Reserve are set to take place on November 6-7 and December 17-18.
Read This Also: -
These are some of the questions that will be answered tonight. Today's Fed meeting will be the biggest Fed meeting of the year.
The Federal Reserve is set to convene on Wednesday to deliberate on the possibility of implementing its first interest rate reduction in four years, which could signify the end of the highest interest rates seen in a generation.
This potential shift may herald a new phase characterized by reduced borrowing expenses for individuals looking to finance a home, purchase a vehicle, or obtain a credit card.
In his recent statements, Federal Reserve Chair Jerome Powell indicated that "the time has come" for a potential reduction in interest rates during the group's meeting in September, which concludes today.
The critical issue now is the magnitude of the cut, with predictions varying between a decrease of 0.25 percent and 0.50 percent to the benchmark federal funds rate, currently at its highest level in 23 years.
The fundamental interest rate, often referred to as the benchmark rate, has remained within the range of 5.25% to 5.5% since July 2023, a consequence of a series of rate increases aimed at addressing the escalating inflationary pressures.
As a result of these adjustments, the interest rates associated with mortgages, automobile loans, and credit cards have surged to unprecedented levels.
The two-day Federal Reserve meeting is set to conclude at 2 p.m., at which point an announcement regarding interest rates will be made.
Following this, Chairman Powell is scheduled to conduct a press conference at 2:30 p.m. The global financial community will be closely monitoring these developments.
What impact will Jerome Powell's decision have on the stock market?
The stock market has experienced an upward trend, driven by expectations of declining interest rates.
.jfif "Fed Chairman Jerome Powell take on interest rates today?") |
| Stock Market |
Such reductions in rates typically enhance stock performance, as they enable companies to secure loans at reduced costs, thereby facilitating investment and expansion of their operations.
Last week, the expansive Standard & Poor’s 500 index achieved its most successful performance of the year, while the prestigious Dow Jones Industrial Average reached an all-time high during trading on Monday.
In the latest market rally, investors have broadened their purchasing activities to include a wider array of stocks beyond the well-known Magnificent Seven, which comprises Apple, Amazon, Alphabet, Meta, Tesla, Microsoft, and Nvidia.
According to Daniel Milan, managing partner at Cornerstone Financial Services, there has been a notable shift towards acquiring high-quality dividend-paying utilities, healthcare, real estate, and consumer staples stocks.
What will Jerome Powell say on inflation?
Inflation, characterized by a prolonged rise in prices across the economic landscape, has consistently exceeded the 10-year average of 2.1% for over three years.
.png "What will Jerome Powell say on inflation?") |
| Inflation |
Federal Reserve officials expressed a preference for maintaining a low and stable inflation rate, as this stability enables them to make informed decisions related to saving, borrowing, and investment activities.
Over the last two years, inflation has experienced a notable decline; however, it continues to be relatively high, primarily due to the persistent costs associated with housing.
In August, the annual inflation rate, as indicated by the consumer price index, decreased to 2.5%, down from 2.9% in July. This figure represents the lowest rate recorded since March 2021, which was a year before the Federal Reserve initiated interest rate hikes.
What will borrowers get from the Fed Chairman's decision?
Should the Federal Reserve decide to lower interest rates today, it is anticipated that borrowers may experience a reduction in the elevated interest rates associated with credit cards and auto loans; however, analysts caution that significant immediate relief should not be expected.
The average interest rate for new credit cards in September stood at 24.92%, remaining consistent with August's rate and marking the highest level since 2019, the year LendingTree commenced its data tracking.
Matt Schulz, a credit analyst at LendingTree, indicated that although credit card bills are likely to decrease from their current record levels in the upcoming months, significant reductions should not be anticipated in the near term.
He emphasized that unless the Federal Reserve unexpectedly accelerates the process of lowering interest rates, credit card annual percentage rates (APRs) are expected to remain elevated for the foreseeable future.
This trend is similarly applicable to interest rates on auto loans and various other forms of debt, according to his assessment.
Will the Fed Chairman cut rates by 0.25% or 0.50%?
The question arises as to whether the Federal Reserve will implement a reduction in interest rates by 50 basis points or merely by 25 basis points.
.png "Will the Fed Chairman cut rates by 0.25% or 0.50%?") |
| Interest Rates |
Current predictions from forecasters indicate a slight preference for a 50 basis point cut, as evidenced by the CME's FedWatch tool, which assesses market expectations regarding potential interest rate adjustments.
As of Wednesday morning, the data reflected a 37% likelihood of a 25 basis point reduction, contrasted with a 63% probability of a 50 basis point decrease.
When will the Fed meeting be next?
Read This Also: -
