US Fed’s rate hike decision in FOMC meeting today – Check timings, where to watch

Global investors are keeping a close eye on the two-day Federal Open Market Committee (FOMC) meeting this week. The FOMC meeting is scheduled for July 25–26, and Fed Chairman Powell will make the announcement regarding the rate hike on July 26 at 2 p.m. ET. The US Federal Reserve website will provide live coverage of the Fed rate hike decision.

After starting the aggressive rate hike campaign back in March 2022, the US Fed paused rate hikes in June. The US Federal Reserve is expected to hike interest rates again at today’s Federal Open Market Committee (FOMC) meeting by 25 basis points.

Will today’s rate hike be the last from the Fed? With inflation fast dropping and exceeding market forecasts, the consensus is building that the Fed may cease its aggressive rate rise spree. The June CPI in the United States was 3% lower than the market expected of 3.1%. Going forward, the majority of market experts anticipate that the Fed will end its most aggressive campaign against US inflation in 40 years on July 26.

Former Fed Chair Ben Bernanke has also been vocal saying the Federal Reserve may decide to end its current credit-tightening effort after this week’s widely anticipated interest rate increase. After the 25 bps rate hike in July, the federal funds rate range would end up rising from near zero levels to a range of 5.25% to 5.5%, the highest since 2001.

However, the Fed may surprise the markets. Softer private-sector job growth and weaker inflation data reduce terminal Fed funds rate forecasts, but the Fed feels policy tightening is still required to achieve 2% inflation. The inflation objective is still some distance away, and a price rise cannot be ruled out. Core inflation figures are still too volatile for the Fed to make a final judgment on inflation.

“Investors may simply continue to bet against the Fed, in which case earnings reports will be a strong driver of sentiment. If investors accept the potential for the Fed to remain hawkish and push the funds rate higher later this year, they must change their discounting models of corporate earnings, leading to more market volatility,” says José Torres, Senior Economist at Interactive Brokers.

Fed Chair Jerome Powell and his colleagues have indicated that they aim to raise rates further, following a pause in June. Also, in its quarterly Summary of Economic Projections released in June, the FOMC projected two additional rate hikes this year. This means after July, another rate hike could be in the offing in September.

Chairman Powell’s press conference will be the main focus. He will have the opportunity to deliver more detailed recommendations to market participants this week, on July 26. “As Fed Chairman Jerome Powell takes the mound, any hawkish comments he makes, including being supportive of another rate hike after this month, may — or may not — drive market performance,” says Torres. Despite Powell’s declaration that he sees a narrow path for a soft landing, the Fed staff has predicted a US recession, according to minutes of previous FOMC meeting.

Where does US Fed go from here? Taimur Baig, Chief Economist and Duncan Tan Strategist DBS Bank in his report titled ‘Macro Insights Weekly Fed, ECB, and BoJ’s divergence’ says, “We think the Fed would continue with quantitative tightening, and with inflation easing, real rates would continue to rise, and by extension, monetary conditions would tighten further, but the overall signal from the central bank would be that the next time it makes a move, perhaps in mid-2024, it would be an easing measure.