Fed rate announcement at 3 am tomorrow, 0.25%p likely… Importantly, Powell’s remarks

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After the March Open Market Committee (FOMC) meeting at 2:00 pm on the 22nd (3:00 am on the 23rd, Korean time), the Fed will announce whether to raise interest rates.

Markets are expecting the Fed to raise interest rates by 0.25 percentage points.

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As of 1:00 p.m. on the 22nd (Korean time), the futures of the Federal Funds Rate (US base rate) traded on the Chicago Mercantile Exchange (CME) reflect the probability that the Fed will raise interest rates by 0.25 percentage points at this FOMC as 84.9%. there is. In comparison, the probability of freezing is 15.1%. The possibility of an interest rate hike of 0.25 percentage point is overwhelmingly high.

In particular, both the US and European stock markets rallied on the 21st, relieving the Fed’s burden. The U.S. stock market rallied on the same day as Treasury Secretary Janet Yellen said she would take further steps, including suggesting that all banks’ deposits would be guaranteed.

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The Dow rose 0.98%, the S&P 500 rose 1.31%, and the Nasdaq rose 1.58%.

European stock markets that closed earlier also surged 1.75 percent in Germany, 1.79 percent in Britain’s FTSE, and 1.42 percent in France.

Despite the global financial crisis, the world stock market is stabilizing. This is expected to significantly ease the Fed’s interest rate hike burden.

Accordingly, a rate hike of 0.25 percentage points is becoming a fait accompli. The market is paying more attention to the remarks of Fed Chairman Jerome Powell than to the extent of the rate hike.

Chairman Powell is expected to explain that the Fed is fighting inflation by raising interest rates, while revealing that the central bank is waging another war to stabilize the financial sector. He is declaring a double war against inflation and the financial crisis.

The Fed is also expected to release its forecasts on the economy and the path of rate hikes. However, experts are unanimous in saying that such a prospect will not mean much. This is because the US is facing a financial crisis, so predicting the future path of interest rates is meaningless.

At 2:00 pm on the 22nd (3:00 am on the 23rd, Korean time), the Fed will announce the base rate along with a new economic outlook, and 30 minutes later, at 2:30 pm, Chairman Powell will explain the Fed’s position through a press conference. .

Meanwhile, the current benchmark interest rate in the US is in the range of 4.5% to 4.75%.

Source: Donga

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