The Federal Open Market Committee, which is a branch of the Federal Reserve, the Central Bank in the US, will hold one of its eight sessions a year this Wednesday to determine the main interest rate level for the American economy. The 'FED's decision will be the most recent such policy statement in a series of central banks` decisions from this month, following the European Central Bank and the Bank of Japan.
The expectation is for the FOMC to keep the interest rates at the current 2.50% rate but the most anticipated part of the event would be the rhetoric which the central bank is expected to take in light of the most recent international developments, such as the negotiations of the trade disputes between the US and China as well as the global economic slowdown. The expectation is for the FED to take a more dovish outlook, similar to the ECB, for the future of the American economy.
We will be watching closely for any hints that the FED might be considering to keep or even lower the interest rates by the end of the fiscal year, given the economic circumstances. Despite the somewhat disappointing data from the most recent NFP report, more information on which you can find from our previous article here, the US economy still boasts a more than promising labour data, with the unemployment rate currently sitting at 3.8% for February, which beat expectations with a 0.1% lower actual rate and registered a 0,2% improvement compared to the data for the month of January.
The current yearly adjusted inflation rate in the US is sitting at 1.5% which missed the forecast with 0.1% and registered a drop from the previous month with the same margin, which is distancing the US from its goal of 2% long-term inflation and is a somewhat point of concern. For those reasons, we might expect the FED to take a stance which is similar to the one adopted by the ECB (more information on which you can find here) and organize its interest rate policy to support the inflation boost on the Phillips curve.
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