As the Federal Reserve (Fed) approaches the close of its policy meeting this Wednesday afternoon, the investment community remains in suspense, awaiting a decision on whether to maintain interest rates. The focus, however, goes beyond the mere stability of rates, focusing on anticipation regarding the continuity of the Fed’s projection of carrying out three reductions in interest rates in the year 2024.
The key to unraveling this unknown lies in the Fed’s long-awaited “dot plot,” a quarterly updated projection tool that reflects individual Fed members’ expectations about future interest rate policy. In the last quarter of last year, this chart signaled a consensus for three cuts in 2024, marking the beginning of a possible easing of the central bank’s monetary policy.
Recently, however, this consensus has been called into question due to a string of higher-than-expected inflation indicators and cautious statements from key Fed figures. Fed Chairman Jerome Powell, along with his colleagues, has reiterated the desire to ensure a “sustainable” reduction in inflation to the 2% target before any rate cut decision.
Faced with these uncertainties, investors have recalibrated their expectations regarding the timing of the cuts, adjusting them from an initial forecast of six reductions starting in March to three starting in June this year. The possibility of a cut as early as June has seen its probability decrease in recent weeks.
Since the last rate hike in July, the Fed has maintained interest rates in a range between 5.25% and 5.50%, the highest level in the last 23 years. The announcement of the Fed’s decision is expected to take place at 2pm ET (6pm UTC), followed by Powell’s press conference at 2:30pm ET (6:30pm UTC).
At the same time, the US stock market is showing a mixed performance, with investors navigating cautiously ahead of the Fed’s imminent statement. The S&P 500 remains stable, close to its closing record, while the Dow Jones registers a slight drop of 0.2% and the Nasdaq Composite shows a modest gain of 0.2%.
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Source: https://portalcripto.com.br/expectativa-dos-investidores-ante-previsao-do-fed-sobre-cortes-nas-taxas-em-2024/
