US Federal Reserve Meeting: Investors Await Key Decision

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12th June 2024- The Federal Open Market Committee (FOMC) of the US Federal Reserve is set to conclude its two-day meeting today, June 12, with global investors eagerly awaiting several key outcomes. Global investors eagerly awaited outcomes on three fronts: interest rate adjustments, Chair Powell’s stance, and the ‘dot plot’ in the Summary of Economic Projections.

In this much-anticipated announcement on June 12 at 2:00 p.m. Despite market speculation, there were no expectations of a rate cut in this policy meeting.

Experts cited the Fed’s decision as a reflection of ongoing economic uncertainties and the persistence of inflation rates that have yet to align with the Fed’s targets. Powell’s commitment to data-driven policymaking underscored the cautious approach, with the Fed opting for stability amidst evolving global economic conditions.

While global markets reacted with relative stability to the announcement, analysts continue to monitor future Fed communications for signals of potential shifts in monetary policy. As economic indicators fluctuate, the Fed remains vigilant, balancing its dual mandate of promoting maximum employment and maintaining stable prices in a dynamic economic landscape.

Comment By industry expert

Manish Chowdhury, Head of Research, StoxBox

“We expect the Federal Reserve to keep its key interest rate unchanged at 5.25% to 5.5% at the end of the two-day policy meeting on Wednesday, with any change in monetary policy outcome still being driven by incoming economic data. Markets would closely watch for any signs on the timing of an interest rate cut going ahead. With the inflation trajectory still not striking chord with the Fed officials and labour market not showing signs of sustained weakness, we believe that the tone of the Fed Chairman is unlikely to change in this FOMC meeting. Our sense is that the CPI reading for May which would prelude the Fed outcome on Wednesday would set the tone if the chatter surrounding a rate cut in September is off the table or not. We would closely watch the FOMC’s Summary of Economic Projections for gaining more insights into the Fed’s patient view of holding rates higher for longer.”

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