Different central banks around the world are meeting this week amid expectations of stabilizing interest rate levels at the same previous level after a series of previous rises. Core consumer price inflation is not falling quickly enough to make these banks stop raising interest rates altogether.
On Wednesday, investors await the Fed’s next interest rate decision, which will be released at 22:00 (GMT+4). Expectations suggest that interest rates will remain fixed at current levels near 5.50% despite inflation holding steady at 3.7%. However, the key focus among investors will be on Chairman Jerome Powell’s press conference scheduled 30 minutes after the rate announcement.
This conference will provide hints about the Fed’s future interest rate policy path and help investors determine the Fed’s thinking regarding current conditions, long-term trends, and when the cycle of interest rate hikes may be nearing its end. Markets will be interested in knowing how long interest rates will remain at current levels, and how the Fed perceives current economic conditions following rising tensions in the Middle East.
The Fed Chairman's recent speech to the Economic Club suggested that the recent drop in inflation was not sufficient to determine the future direction of interest rates, and that it is not possible to know where inflation will settle over the upcoming period. Most importantly, Jerome Powell pointed out that both the labor market and economic growth need to slow to achieve the Fed’s inflation target.
If the Fed indicates additional rate hikes ahead in today’s conference or that interest rates will remain at higher levels for a longer period than previously expected, analysts expect this to work in favor of the US Dollar while negatively impacting gold and stock prices.
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