As has been the case for a long time, the Fed did not change interest rates in June and left them unchanged at 5.25-5.50%. Following the June decision, markets are now looking ahead to the July interest rate decision.
When will the Fed announce its interest rate decision for July?
While the Fed’s fifth interest rate decision of 2024 is expected to impact gold, the dollar, oil, Bitcoin (BTC) and cryptocurrencies, the Fed will announce its July decision on July 31, which is today at 21:00 CET.
Following the decision, Fed President Jerome Powell will deliver a statement at 2130 GMT.
In which direction are expectations concentrated?
While market expectations are once again focused on the Fed keeping interest rates on hold, statements from Fed Chairman Jerome Powell are also of great importance.
The Fed, which has long been battling inflation, is expected to begin cutting interest rates in September following positive economic data in recent months.
While experts say a rate cut is all but inevitable despite Powell’s reluctance, Glenende investment strategy manager Michael Reynolds said he expects markets to price in a rate cut in September anyway.
In an interview with CNBC, Michael Reynolds said he expects interest rates to remain unchanged.
“However, after the meeting, much attention will be paid to statements by Fed Chairman Powell. Powell’s statement may not contain a clear statement about the interest rate cut in September.
Because they don’t want investors to start pricing in the rate cut that’s going to happen in September, but even if they don’t want that, that rate cut and that pricing is going to happen. They have no other choice.
They need to understand that opening the door to a rate cut is probably the best thing for them right now. But the markets are already very excited about it, pricing it in with almost 100% certainty. They just need to move in that direction.”
Finally, Reynolds added that they expect the Fed to cut interest rates at each of its remaining three meetings, starting in September.
Barclays analysts also said in a note sent to clients that the Fed will not be able to ignore market expectations and will open the door to a discount in September.
The Fed may soften its rhetoric!
Goldman Sachs economist David Mericle also said he expects the Fed to ease on its previous statements and that it now just needs “a little more confidence” to start cutting interest rates.
“The Fed may soften its rhetoric today that it ‘will not cut interest rates until it has more confidence that they are on a sustainable path toward 2 percent.’
Additionally, recent statements from Fed officials indicate that they will maintain the pause at today’s meetings, but we are approaching the first interest rate cut.
“The main reason the FOMC is moving toward rate cuts is the positive inflation data in May and June.”
The chance of the Fed cutting interest rates tonight is currently rated at 3.1%, while the chance of keeping rates unchanged is 96.9%, according to the closely watched CME FedWatch tool.
However, the chances that the Fed will cut rates at its next meeting on September 18 are estimated at almost 100%. The difference was in the question of how big the interest rate cut would be.
*This is not investment advice.
