Federal Reserve's March Meeting to Conclude Tomorrow
Tomorrow, the Federal Reserve is expected to make highly consequential announcements.
- Fed Chair Jerome Powell said earlier this month that he would push for a 25 basis point interest rate increase in March’s meeting.
- The Federal Reserve has noted the need for it to remain “nimble” when it comes to monetary policy, especially given the Russian invasion of Ukraine.
- The Fed will also update its projections for economic growth.
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The long-awaited Federal Open Market Committee meeting began today and ends tomorrow at 14:00 EST with some important decisions expected to emerge.
FOMC March Meet
The Federal Open Market Committee’s meeting is currently underway and is scheduled to conclude tomorrow amid great anticipation of the Federal Reserve’s next move.
January’s FOMC meeting left a chill in the markets, possibly because Chair Powell indicated that the Fed saw a strong economy—one that might be able to withstand interest rate increases of as much as 0.25%.
On Mar. 2, Chair Powell told Congress that he was “inclined to propose and support a 25-basis point rate hike.” 25 basis points equal 0.25%.
He also noted how the Fed “would proceed carefully” due to the “highly uncertain” economic effects that could be seen from the Ukraine and Russia conflict and sanctions. He cited rising commodity prices as an example of the war’s impact.
“Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways. We will need to be nimble in responding to incoming data and the evolving outlook.”
In other words, the Russian invasion of Ukraine has added uncertainty, which is often bad news for markets. However, it appears that this uncertainty might give the Federal Reserve reason to favor “dovishness” rather than “hawkishness.”
The Fed has maintained consistency on its general view that inflation will peak this year and come down naturally. While Powell has ditched the term “transitory” to describe inflation, the Fed still believes inflation is indeed a passing phenomenon, as Powell noted earlier this month.
Tomorrow, the FOMC predictions for this year’s gross domestic product will also be released. If the Fed brings down its expectations for growth in a major way, this could bring markets down and exacerbate recession fears (recessions are when GDP turns negative for two consecutive quarters). As of December, it predicted 4% growth.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.