What to expect from FOMC meet ahead?

Today, the U.S. Federal Reserve will announce its monetary policy decision at 18:00 GMT. While the majority of the policymakers do support faster rate hikes, some policymakers are expressing doubts over the path of inflation going ahead and the ill effects of early policy windup. Charles Evans joined Neel Kashkari in opposing the third rate hike for 2017.

A majority of the Federal Reserve policymakers voted in favor of a hike in March, which shows despite the differences FOMC board remains more or less united.

The focus will be on the followings –

• Policy decision –Most of the analysts and economists expect the Fed to maintain the Federal Funds Rate unchanged at 150-175 bps. The market is pricing a 94.3 percent chance of no rate hike at today’s meeting.
  
• Fed’s monetary policy statement – The market would be looking for a clue to future rate hikes by assessing the tone of the statement. In the absence of projection materials and with no press conference scheduled that market would be looking closely at the statement to assess the bias.

The financial market is pretty convinced that the U.S. Federal Reserve would not increase the rate at today’s meeting. The next hike is priced in June with 94 percent probability.

In its January FOMC projection, the Fed forecasted three rate hikes for 2018, after increasing interest rates thrice in 2017. The market is currently pricing the third hike in September with 77 percent probability.

According to the March’s projection materials, the U.S. Federal Reserve would hike thrice this year, however, the financial market is pricing the fourth hike in December with 49 percent probability.

The dollar index is currently trading at 92.33, down 0.12 percent so far today.