The next Federal Open Market Committee (FOMC) meeting is scheduled for March 21 and 22. The US Fed rate hike decision will be announced on March 22 at 2 pm (ET) followed by a press conference.
During these two days, the FOMC will discuss and decide on various economic policies, including potentially raising interest rates, to control inflation in the US. The meeting is important for investors and economists not only for watching rate hike decisions but also because the Fed will release the Summary of Economic Projections, which will provide insight into policymakers’ views on interest rates and the US economy for the remainder of 2023 and beyond.
Markets had previously expected the Fed to raise rates by 25 basis points in its March 21-22 FOMC meeting, but Powell’s earlier testimony to Congress sent market signals of a 50 basis point hike as the chief sounded hawkish. Expectations of a larger rate hike vanished after the news of the banking crisis erupted.
At the meeting, Fed officials will have to decide whether to ignore the recent failures of two US banks and concerns about a Swiss bank and hold rates to give the financial system time to stabilize or to focus on combating inflation by raising rates as planned.
On January 31-February 1, the US Fed raised interest rates by a quarter percentage point, bringing the Fed funds rate to the 4.50%-4.75% range. Previously, the US Fed gave four consecutive 75bps rate hikes and then a 50 basis point increase in December, followed by a 0.25% hike in January.
Some industry experts are looking for a Fed pause while others are expecting a 50bps rate hike. Going slow by hiking the rate by 25 bps could be the road the Fed chooses. How the US Fed is seeing the ongoing banking crisis and inflationary pressure in the economy will get revealed on March 22.