Today, the US Federal Reserve commenced a two-day meeting to determine whether to increase its benchmark lending rate for the 10th, and potentially final, time in order to address surging prices.
Since March of last year, the Fed has pursued an assertive strategy of raising interest rates to combat high inflation, which continues to exceed its long-term target of two percent.
As the Federal Open Market Committee (FOMC) is broadly expected to raise its base rate by a quarter-point on Wednesday, analysts will be examining any alterations to the forward guidance in its statement, as mentioned by Goldman Sachs’ chief US economist David Mericle in a recent client note.
Futures traders anticipate a greater than 95% likelihood that the Fed will increase its benchmark lending rate by 25 basis points. 🇺🇸 This adjustment would elevate the interest rate to a range of 5 to 5.25%, marking its highest level since prior to the global financial crisis. https://t.co/zgsK69Wt3C
— Share_Talk ™ (@Share_Talk) May 2, 2023
Mericle stated that he anticipates the Committee will indicate a pause in June, but maintain a hawkish stance, ending earlier than initially planned due to the likelihood of bank stress causing credit tightening.
According to CME Group, futures traders foresee a greater than 95% chance that the Fed will increase its benchmark lending rate by 25 basis points when announcing its decision tomorrow. This adjustment would elevate the interest rate to a range of 5 to 5.25%, marking its highest level since prior to the global financial crisis.
