The US Federal Reserve, which started its meeting on Tuesday and will announce the results of its meeting at the end of the American session today, Wednesday, March 16, is leading the events of the first quarter of this year, given that it is the meeting that investors have long been waiting for since the middle of last year, because it will be the first meeting that will witness an interest rate hike since 2018, and therefore its decisions will affect its decisions. On the rest of the central banks, especially emerging ones.
The Federal Reserve is expected to raise interest rates by a quarter point (25 basis points), and this percentage of the hike is fully calculated in the markets.
The rate that the US Federal Reserve will raise interest rates by 50 basis points at this meeting was more than 80% before the Russian-Ukrainian war in early February, to shrink to less than 3% today after the war raised the uncertainty in the markets and changed the decisions of central banks.
The latest inflation reading in the United States of America came in an increase in the annual index in February to 7.9% from 7.5%, recording the highest pace since 1982, in line with expectations, while the annual core index rose to 6.4% from 6%.
The US Federal Reserve must now balance achieving good growth levels while overcoming the problem of inflation by raising inflation rates, which will be the most difficult equation after the rise in metal, food and all energy products prices to record levels.
The latest US Federal Reserve forecasts that were issued indicated three increases in interest rates during the year, but now the markets are priced about 5-6 hikes during the year, and accordingly, the economic outlook report will be important in determining market movements.
The committee is also expected to raise its inflation expectations and at the same time it will revise its growth forecasts for at least the first half of this year, but it is expected to keep its expectations for unemployment rates unchanged.
Market movements
will be based entirely on Bank President Jerome Powell’s statements and his future outlook on interest rates and the extent to which the Fed is willing to go to stop the rise in inflation rates, in addition to interest expectations or the Diet Pilot chart that will be issued every three months. motion scenarios If Powell was confidently hawkish in his speech and stressed the need to tighten monetary policy to combat inflation, in addition to raising members from their expectations of the Diet Pilot scheme to raise interest rates and rising inflation expectations would support the US dollar.
If Powell’s speech came hesitant and lost confidence, and Powell reduced inflation fears, and the expectations of the Diet Pilot scheme or the interest scheme came to a lower degree by 4 or 5 times to raise during the current year, the US dollar would decline.
05/11/2024
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