FOMC Meeting Preview: What Will The Federal Reserve's Next Move Be?

Zinger Key Points
  • The resilience of the U.S. economy might lead to an additional interest-rate hike this year by the Federal Reserve.
  • An upgrade in the economic outlook was predicted by policymakers, according to a Bloomberg News survey.

After a week of data-driven rollercoaster rides, all eyes are now firmly fixed on the upcoming Sept. 20 Federal Open Market Committee (FOMC) meeting.

The FOMC is anticipated to maintain rates in the range of 5.25% to 5.5% during its September meeting, pushing the first rate cut further down the road to May next year, a two-month extension from previous forecasts.

However, even though all signs point toward a choice to retain the existing interest rates, the market might still perceive this decision as a worrisome display of hawkishness.

According to experts, the Federal Reserve may be considering an additional interest-rate hike this year due to the resilience of the U.S. economy.

The hike could maintain peak rates into the following year, longer than previously anticipated, as released by a survey of economists conducted by Bloomberg News.

However, the consensus among surveyed economists is that, while the Fed may indicate one more rate hike this year, it’s unlikely to proceed with it.

See Also: Jamie Raskin Warns Joe Biden’s Impeachment Could Lead To GOP’s Humiliation: ‘It Will Be The End Of The Re

Economic Resilience Could Keep The Fed Hawkish For Longer

Fed Chair Jerome Powell and his colleagues have hinted at a halt in rate hikes for the upcoming month as they approach the peak in interest rates.

During a conference held last month in Jackson Hole, Powell expressed concerns about persistently high inflation and emphasized the central bank’s readiness to implement further tightening measures if necessary.

The strength of the economy is poised to play a pivotal role in the discussions during the September meeting. It is anticipated that the median committee member will project a robust economic growth rate of 2% for this year, marking a significant increase from the 1% forecast made in June.

The current unemployment rate, standing at 3.8%, is expected to experience a marginal rise to 3.9% or potentially dip below the 4.1% rate observed in June.

Looking ahead: The committee’s upcoming forecasts are likely to provide a glimpse into 2026, and the median policymaker is expected to predict interest rates reaching 2.6% by the conclusion of that year. Additionally, the committee may continue to express concerns about elevated inflation, with a year-end projection pointing to 3.2%.

Peter Thiel, Mark Cuban and Warren Buffet funded early-stage startups and made millions. You don't need to be a well-connected billionaire to do the same. Click here to invest in promising startups today.

Photo: Shutterstock

Market News and Data brought to you by Benzinga APIs
Posted In: Macro Economic EventsEconomicsFederal ReserveAI Generatedbenzinga neuroFOMC MeetingInflation Rateinterest rateInterest RatesJerome PowellPowell
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!