FxWirePro: What to watch in 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 narrowing of the spreads or the yield curve flattening.

The U.S. Federal Reserve has hiked rates by 25 basis points twice this year and forecasted two more hikes by the end of the year.

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 175-200 bps. The market is pricing a 97 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 September with 87 percent probability.

In its June FOMC projection, the Fed forecasted four rate hikes for 2018, after hiking twice in 2018. The market is currently pricing the fourth hike in December with 57 percent probability.

The dollar index is currently trading at 94.62, down 0.07 percent so far today.