The Federal Open Market Committee will be in focus today as they provide their latest update on monetary policy. The US central bank will likely keep policy unchanged, with interest rates near zero and quantitative easing continuing to run at $120 billion per month.
Regardless of the above, the announcement still has a high level of anticipation surrounding it. As the US economy continues to march forward, with solid levels of improvement seen this year, the prospect of a more hawkish Fed has snuck into market expectation. Even though it’s only a small possibility, there remains a chance Jay Powell may acknowledge the marked improvement and hint at a faster return to monetary normality. Such comments would induce a large reaction from markets, with the buck becoming bid and risk assets such as equity indices being sold off.
The policy announcement arrives tonight at 7 pm with the important accompanying statement and press conference scheduled for 7.30 pm.
Written by Viv Savani. 8:02am, April 28th 2021
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