Investors Await Rate Hike Clarity as Next Fed Meeting Looms

The central bank’s next meeting is scheduled for March 20 to 21, and market watchers are eager to see whether three or four hikes are planned this year.
As this week’s US Federal Open Market Committee meeting draws closer, investors and analysts are watching closely to see what will come from Jerome Powell’s first meeting as chair.
While the primary expectation of this week’s meeting is that interest rates will rise for the first time this year, a lingering question remains: will there be three hikes in 2018 or four?
The Fed’s target inflation rate is 2 percent, and it has said it expects to hit that by the end of the year. January brought a 0.5-percent rise in the consumer price index, but February saw an increase of 0.2 percent, raising expectations that the Fed will stick with three hikes in 2018.
“I don’t think that Powell has any incentive to come out with guns blazing and disappoint the markets right now,” Jonathan Golub, Credit Suisse (NYSE:CS) chief US equity strategist, told CNBC.
“The last jobs report said the risk [of inflation] was less than we might have thought. I don’t think we’re going to get a punch in the nose from the Fed this week,” he added.
That being said, experts are weighing in on what kind of hike market watchers can expect to see on Wednesday, with most placing their bets in the 25-basis-point range.
“We changed our call from three to four hikes. We think they’ll do another 25 basis points hike,” Boris Rjavinksi, director of rate strategy at Wells Fargo (NYSE:WFC), told the news outlet. “They acknowledged the economy is on a fairly robust path without too many signs of overheating.”
If the Fed strays from outside that range it’s possible the market could react poorly.
“The market is not pricing in really outlier types of scenarios here,” commented Stacey Gilbert, a market strategist at Susquehanna Capital Group. “Call it a 25 basis point, no significant changes, the broader S&P (INDEXSP:.INX) market might be up 20 to 40 basis points.”
A hike of 50 basis points could be a different story. “If we get an outlier event like a 50-basis-point rate hike, seeing the S&P 500 down 3 percent is certainly not the craziest statement I’m ever going to make,” Gilbert explained.
As of Friday (March 16), CME Group placed the likelihood of a hike of 25 basis points at 94 percent. The Fed’s meeting this week will run from March 20 to 21, with remarks from Powell coming after.
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.
MARKETS
COMMODITIES
Commodities | |||
---|---|---|---|
Gold | 1814.13 | -4.69 | |
Silver | 20.64 | -0.10 | |
Copper | 3.73 | -0.06 | |
Palladium | 1981.00 | +19.00 | |
Platinum | 911.29 | -7.71 | |
Oil | 109.60 | -0.18 | |
Heating Oil | 3.98 | +0.02 | |
Natural Gas | 6.51 | +0.01 |
DOWNLOAD FREE REPORTS
BROWSE COMPANIES BY SECTOR
- Agriculture Investing
- Phosphate Investing
- Potash Investing
- Base Metals Investing
- Copper Investing
- Iron Investing
- Lead Investing
- Nickel Investing
- Zinc Investing
- Battery Metals Investing
- Cobalt Investing
- Graphite Investing
- Lithium Investing
- Manganese Investing
- Vanadium Investing
- Critical Metals Investing
- Magnesium Investing
- Rare Earth Investing
- Scandium Investing
- Tantalum Investing
- Tellurium Investing
- Tungsten Investing
- Energy Investing
- Oil and Gas Investing
- Uranium Investing
- Gem Investing
- Diamond Investing
- Industrial Metals Investing
- Aluminum Investing
- Chromium Investing
- Coal Investing
- Molybdenum Investing
- Tin Investing
- Precious Metals Investing
- Gold Investing
- Palladium Investing
- Platinum Investing
- Silver Investing
- 3D Printing Investing
- Bitcoin Investing
- Blockchain Investing
- Cleantech Investing
- Cloud Investing
- Cryptocurrencies
- Data Investing
- Emerging Tech Investing
- Artificial Intelligence Investing
- Mobile Investing
- Robotics Investing
- Fintech Investing
- Gaming Investing
- Esports Investing
- Nanoscience Investing
- Graphene Investing
- Nanotech Investing
- Security Investing
Featured stocks
Investing News Network websites or approved third-party tools use cookies. Please refer to the cookie policy for collected data, privacy and GDPR compliance. By continuing to browse the site, you agree to our use of cookies.