Today, Wednesday, December 15th in the American session, the Federal Reserve will announce its monetary policy represented in the interest rate, which is expected to keep it unchanged, in addition to the committee’s statement and the press conference of US Federal Reserve President Jerome Powell, which is expected to witness drastic changes, in addition to the committee’s economic outlook report.

reserves, which are issued every three months. The US Federal Reserve announced in its meeting on November 3 that it will start reducing its program of quantitative easing to buy bonds, amounting to 120 billion dollars per month, by 15 billion dollars per month, until it ends in the middle of next year, which means that the bank is supposed to reduce an additional 15 billion dollars at today’s meeting.

The latest development from the US Federal Reserve is to change the vision of Jerome Powell and members of the committee in the last two weeks with the acceleration of inflation rates. Intervening and considering accelerating the process of reducing purchases.

Market expectations indicate that the US Federal Reserve will accelerate the pace of reduction by doubling, i.e. $30 billion per month, to end by the end of March of next year, in addition to expectations that members will review their expectations for growth and inflation in the first quarter in their economic expectations in light of accelerating inflation and Omicron’s concerns.

With the end of the program in March, the Fed will officially pave the way for raising interest rates in the second quarter of next year. Therefore, it is expected that the expectations of the new Fed members, or what is known as the Dot Plot, will be a two or three hike next year. Markets are currently pricing in an opportunity of more than 60%, according to FedWatch’s CME Group tool, hours before the bank’s meeting to raise interest rates in May, and more than 80% in June.

Expected scenarios The most prominent scenario so far is that the bank increases the easing of the bond purchase process by 30 billion dollars per month and ends in March without hinting that raising interest rates will follow it directly, and therefore the market reaction to the dollar will be strong at first before the dollar declines over time because the markets interact more with Determine the date for raising interest.

The other scenario is easing, with a note that interest rates will be raised successively after the cut is completed, and the US dollar will be the biggest beneficiary. The movement is strong compared to the first scenario, while stock markets and gold prices will decline.

The least chance scenario is not to change the asset purchase rates and keep it as it is now at $15 billion per month, noting that the reduction is expected to end faster if necessary, and this scenario is expected to expose the US dollar to great pressure during the session.