Fed meeting - What you need to know in markets on Wednesday

Fed meeting - What you need to know in markets on Wednesday

Fed meeting - What you need to know in markets on Wednesday

Powell will speak on Wednesday afternoon following the Fed's latest monetary policy announcement, which markets expect to see the Fed raise interest rates.

Wednesday's rate increase once again drew criticism from President Donald Trump, who has complained that the Fed's actions are countering his efforts to boost the economy.

In August, the president said he was "not thrilled" with Powell, his own appointee, for hiking rates.

Given that the most recently quarterly GDP growth experienced in the U.S. was 4.2 per cent, effectively they are saying that the growth rate that Trump claimed in his address to the United Nations this week made the USA economy the "envy of the world" and the "fastest-growing economy in the world" (it isn't) is temporary and unsustainable and is going to fall away quite sharply.

The Fed will announce its interest rate decision at 2 p.m. Powell's news conference is scheduled for 2:30 p.m.

The policy meeting also marked the removal of the phrase "the stance of monetary policy remains accommodative" from the Fed's statement.

Federal Reserve Chairman Jerome Powell says that the several rounds of tariffs launched by the Trump administration have yet to hurt the USA economy's performance.

The Fed noted that inflation has remained near its 2 percent objective.

Credit card rates are most sensitive to changes in the federal funds rate, nearly directly matching the rate change with a 1.92-point increase since late 2015 when the Fed began to hike rates, said Nick Clements, co-founder of MagnifyMoney.com, a financial information website.

The majority of Fed members also said they expect another hike in rates before the end of 2018.

And more moves are on the way with no hint of a pause, although the Fed did not give any sign it was about to become more hawkish and raise rates at a faster pace, as some analysts had suggested.

But analysts worry that raising rates too quickly could tip the economy into recession.

The Fed still foresees another rate hike in December, three more next year, and one increase in 2020.

"I'm anxious about the fact that they seem to like raising interest rates", the president added.

The term "accommodative" meant that interest rates are sufficiently low to spur economic growth and reduce unemployment. The tariffs Trump has imposed on imported steel and Chinese goods, in particular, complicate the Fed's decision-making. "We could do other things with the money".

Powell said the Fed was hearing a "rising chorus" of concerns from businesses around the country about uncertainty and rising costs.

That will add to the upward pressure on market interest rates but, over the course of 2019, will also see US$600b of liquidity siphoned out of the system.

If you took a class in Futures 101 then you should know that the futures markets discount future events.

Powell cites the affordability index from the National Association of Realtors and tells reporters at a Wednesday news conference that homes are generally more affordable now than before the housing crisis.

The rate is seen rising to 3.1 percent in 2019 - the same as the last forecast - which indicates three more moves, as inflation is expected to hold at the Fed's goal of two percent.

Daragh Maher, the head of FX strategy for the United States at HSBC, said the change in language reflects "the reality that policy can no longer be usefully described as loose".

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