Over 97% traders expect that the Fed will hold rates at the same level when the FOMC’s two-day meeting ends tomorrow. Only a tiny minority of traders expect a quarter-point increase. That means that the bulk of the focus for this event will likely be on the statement and particularly Fed Chair Jerome Powell’s post-rate decision presser. There is a lower chance of volatility in the market than usual.
That doesn’t mean that Powell can’t shake things up quite a bit. The Fed is at odds with the market. According to the Fed, one more rate rise is expected before the end year. But the majority of traders don’t believe that. It’s not a super strong consensus – just 57% of traders – but the market is not pricing in another rate hike after tomorrow. The dollar could gain a little extra if Powell continues to insist on rate hikes.
Anticipating an Event
The ambivalence about what could happen is one of the biggest problems analysts face, and it can have a negative impact on the market’s reaction. Powell said that data would determine the Fed’s future decisions on interest rate hikes. The sentiment was also echoed last week by several FOMC voting members, just before…