The Federal Reserve is expected to hold interest rates steady this week for reasons that have as much to do with what Fed officials have said as with what the economy is doing
Officials’ calls for patience and the approaching midterms make a surprise rate increase hard to pull off, even after firmer inflation readings.
The US Dollar (USD) remains well-supported in global FX markets, with traders anticipating the Federal Reserve will maintain the Fed funds rate steady at 3.75-4.00% during its policy meeting on Wednesday. Futures markets currently price in only a 10% chance of an October rate hike, shifting investors' focus to the strength of US economic growth and persistent price pressures.
Brown Brothers Harriman (BBH) and TD Securities analysts project the Fed will keep interest rates unchanged at 3.75-4.00% this week, with a December hike being virtually fully priced in. Q3 GDP growth is expected at 3.2% annualized, while September's core PCE inflation accelerated to 3.1% yearly. These factors suggest strong US economic activity and rising price pressures that will sustain the Greenback's yield advantage, with a December rate hike likely to follow.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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