US interest rate decision (Wednesday)
US Federal Reserve interest rate decision
The Federal Open Market Committee meets eight times each year to set the short-term interest rate. After the meeting, the Bank publishes a statement containing the interest rate decision, a brief commentary on the economic conditions that influenced their decision, and most importantly, it contains indications regarding the outcome of future meetings. The decision to set interest rates depends mostly on inflation. Because the main objective of the central bank is to achieve price stability;
when inflation rises above about 2%, the bank raises the interest rate in an attempt to bring down rates. An upward trend in interest rates has a positive effect on a country's currency. Short-term interest rates are a factor in the appreciation of a currency, so traders watch most other indicators just to predict how interest rates may change in the future. High-interest rates attract foreigners who are looking for the best return with the least risk on their money, which leads to an increased demand for the country's currency.
The current situation may require an economic recession to stop the rise in prices, so investors should expect the S&P 500 index to lose more than a quarter of its value.
The Federal Reserve’s policies to control wage growth and tame inflation could push the unemployment rate to 6% and the 5-year Treasury yields to 5.4%.
Deutsche Bank: The US Federal Reserve may raise the interest rate to 5% to curb inflation
The Federal Open Market Committee meets eight times each year to set the short-term interest rate. After the meeting, the Bank publishes a statement containing the interest rate decision, a brief commentary on the economic conditions that influenced their decision, and most importantly, it contains indications regarding the outcome of future meetings. The decision to set interest rates depends mostly on inflation. Because the main objective of the central bank is to achieve price stability;
when inflation rises above about 2%, the bank raises the interest rate in an attempt to bring down rates. An upward trend in interest rates has a positive effect on a country's currency. Short-term interest rates are a factor in the appreciation of a currency, so traders watch most other indicators just to predict how interest rates may change in the future. High-interest rates attract foreigners who are looking for the best return with the least risk on their money, which leads to an increased demand for the country's currency.
The current situation may require an economic recession to stop the rise in prices, so investors should expect the S&P 500 index to lose more than a quarter of its value.
The Federal Reserve’s policies to control wage growth and tame inflation could push the unemployment rate to 6% and the 5-year Treasury yields to 5.4%.
Deutsche Bank: The US Federal Reserve may raise the interest rate to 5% to curb inflation
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