The U.S. Federal Reserve is all set to bring out its next policy decision on the 18th of December with a widely expected interest rate reduction of 0.25%. However, the outlook for the Fed policy beyond this meeting remains uncertain while the additional rate cuts are expected, any adjustments in the magnitude and timing of these future cuts could have a major impact on the markets.
This week is packed with different U.S. economic data releases which consist of November retail sales, personal income, industrial projection, personal spending and a wide range of housing statistics. Yet, the December decision of the Fed is of the greatest potential to sway away the markets in the coming week.
This announcement is specifically crucial as it represents one of the major data points of the year and the trading volumes are expected to dip next week in the light of the holiday season.
The Fed will reveal its interest rate policy decision on December 18 at 2 PM ET which will be accompanied by the release of projections from the Federal Open Market Committee. Fed Chair Jerome Powell will lead a press conference soon after the announcement by the Fed on the same day.
A rate cut from the Fed is highly anticipated, Prestige Economics has been predicting this reduction since September and the last set of Fed projections from September 18 also indicate another cut this year.
According to the CME FedWatch Tool, the likelihood of 0.25% interest cur rate on December 18 stood at 96% as of December 15 while the probability of maintaining the current policy was just 4%. The quarterly FOMC forecasts will be disclosed with the December Fed policy statement and these projections are taken seriously as FOMC members are the individuals responsible for setting and voting in Fed policies.
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