The US Federal Reserve’s FOMC meeting minutes to be released today will help global investors to sense whether Fed policymakers have been much dovish or hawkish in recent months. The FOMC meeting minutes from April 30-May 1 may indicate a higher-for-longer rate regime from the Fed policymakers, even though inflation is still going downward.
On Wednesday, May 22 at 2:00 PM ET, the FOMC meeting minutes will be released, assisting investors in making trading decisions in the market as they anticipate the first rate cut to occur in September.
The ground is getting prepared for the Fed to start cutting interest rates. To the Fed’s advantage, the US CPI inflation and the core inflation data for April came in lower than the previous month. Now, with multiple Fed officials expected to speak this week and the most recent FOMC minutes being made public, investors are searching for more clues regarding the timing of the Fed’s interest rate reductions.
Fed is perhaps, and rightfully, playing the waiting game. Fed Board Governor Michael Barr said that before lowering the Fed Funds rate, members of the Fed need to see additional evidence that the pace of inflation is sustainable. Barr thinks that in order to control inflation, the Fed should extend the duration of its current tight monetary policy.
“Barr also said the Fed is considering requiring all large banks to report unrealized losses on capital. Currently, only the largest banks are required to do so. By expanding the requirement to additional banks, reporting would better reflect interest rate risks.
The Fed is also considering increasing liquidity requirements to improve banks’ ability to deal with funding shocks. Another proposal involves limiting banks’ use of held-to-maturity assets within liquidity buffers. The Fed, meanwhile, is reviewing public comments on various proposals, including requiring banks to issue more long-term debt that could be used when bank failures are resolved,” says José Torres, Senior Economist at Interactive Brokers.
Global inflation is declining slowly and gradually. According to data released on Wednesday, annual U.K. inflation came in at 2.3% in April. Although this was higher than the 2.1% prediction, the reading in March was 3.2%, which is substantially closer to the Bank of England’s 2% target.
After the closing bell on Wednesday, Nvidia will issue its highly anticipated quarterly earnings report. Investors will be looking for details on the new Blackwell platform and data center growth.
After the FOMC meeting minutes are released on Thursday, market volatility is expected to resurface. More significantly, the earnings report from Nvidia, a giant in the semiconductor industry, may provide traders with a reason to move the market.