US Federal Reserve meet today: Fed may decide on $4.2 trillion balance sheet

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Published: September 19, 2017 5:58:07 PM

The market and investors around the globe are keenly awaiting the outcome of the United States Federal Reserve's two-day meet at Washington starting Tuesday.

It is widely expected from the Federal Reserve’s sixth meet of this year that it may announce paring its .2 trillion balance sheet. (Image: Reuters)

The market and investors around the globe are keenly awaiting the outcome of the United States Federal Reserve’s two-day meet at Washington starting Tuesday. It is widely expected from the Federal Reserve’s sixth meet of this year that it may announce paring its $4.2 trillion balance sheet, with the reductions likely to start this year. The market participants will be listening for any indications or fresh hints on the chances of another rate rise this year and how many could be expected in 2018.

$4.2 trillion balance sheet

The Federal reserve meeting is likely to yield details on how the central bank will unwind its $4.2 trillion portfolio of Treasuries and mortgage-backed securities, nearly a decade after the global financial crisis. The US Federal bought large quantities of Treasury and mortgage bonds way back during the global financial crisis of 2007 to 2009, which was done in a move to push down long-term borrowing costs and to unfreeze the credit cycle which was drastically stalled by the consequences of financial crisis.

Federal funds rate

In July 2017, Federal Reserve maintained the target range for the federal funds rate at 1-1.25%. “The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate,” Federal Reserve stated in last meet on 25-26 July 2017. Forecasters expect the Federal Reserve to leave interest rates unchanged and stick to plans to raise rates in December, Associated Press reported.

Brightest market today

Japan’s Nikkei share average surged 2% on Tuesday after Monday’s national holiday to hit its highest close in more than two years. The investors drew confidence from a weakening yen and gains on Wall Street, while hopes of a snap election underpinned the market. The Nikkei jumped 2% to end at 20,299.38, the highest closing level since August 2015.

US markets on Monday

The S&P 500 ended slightly higher on Monday as financial stocks rose ahead of a Federal Reserve meeting, but the Nasdaq pared gains sharply as technology stocks lost ground late in the session. The Dow Jones Industrial Average rose 0.28% to 22,331.35 points, the S&P 500 gained 0.15% to 2,503.87 points and the Nasdaq Composite added 0.1% to 6,454.64 points. After pushing the S&P above its 2,500-point milestone last week, investors were holding their fire as they awaited more clues on the timing of the next rate hike from Fed Chair Janet Yellen.

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