Markets are anticipating a near-zero chance that the policy-setting arm of the central bank will announce any change to interest rates.
The Federal Reserve has been ensnared in a holding pattern that likely will be reflected when it closes its meeting Wednesday.
Federal Reserve Chairman Jerome Powell prepares to testify before the Senate Banking, Housing and Urban Affairs Committee on March, 7 2024.Faced with stubborn inflation that has raised concerns about where policy is headed, the Federal Reserve has been ensnared in a holding pattern that likely will be reflected when it closes its meeting Wednesday.
"Pretty much everybody on the FOMC is talking from the same script right now," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott. "With maybe one or two exceptions, policymakers pretty universally agree that the last few months of inflation data are too warm to justify action in the near term. But they're still hopeful that they will be in a position to cut rates later.
None of those numbers are consistent with the Fed's goal and likely will push Powell to exercise caution about where policy goes from here, with an emphasis on the fading outlook for rate cuts anytime soon.
The Wall Street bank's economists are preparing for the possibility that the Fed could be on hold for longer, particularly if inflation continues to surprise to the upside. In addition, they said the prospect of higher tariffs following the presidential election — favored by former President Donald Trump, the Republican nominee — could be inflationary.
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