Wall Street anticipates that the Federal Reserve will maintain interest rates during the FOMC meeting commencing tomorrow and concluding on Wednesday, while also keeping the option open for potential rate hikes if necessary.
Wilmer Stith, the portfolio manager for Wilmington Trust, noted, "Fed Chair Powell aims to stay right in the middle; they've already entered tightening cycles, if they haven't already concluded."
In September, the Fed held interest rates steady at a range of 5.25% to 5.50%, the highest level in 22 years. Simultaneously, updated projections indicated the need for an additional rate hike this year to bring inflation back to the 2% target.
Earlier this month, Powell signaled at the New York Economic Club that the central bank might choose to keep interest rates unchanged at the next policy meeting. However, the Fed Chair also cautioned that if inflation remains persistently high and the economy continues to surprise on the upside, further rate hikes remain possible.
Powell stated, "Given the uncertainties and risks we face, the Committee is proceeding with caution. Decisions about the scope of further policy tightening and how long policy will remain restrictive will be made based on the totality of incoming data, evolving outlook, and risk balance."
Founder of Azoria Partners hedge fund, James Fishback, believed that the Fed would remain on hold until the end of the year.
Fishback remarked, "We need a period of growth consistently below target to sustainably bring inflation back to target. And there's no sign that below-target growth will occur anytime soon."
He added that it wouldn't be surprising if the Fed opted for another rate hike in the first quarter of 2024 and kept rates at or above current levels for close to two years.
The Fed's projections released in September indicated policymakers foresee a 0.50% reduction in interest rates next year.
