The US Federal Reserve began the first of two days of debate on interest rates yesterday, with analysts and traders widely expecting another pause — and hoping for clues about a September rate cut.
The meeting began at 10:00am local time (1400 GMT), the Fed said in a statement. Its decision will be published on Wednesday afternoon local time.
Fed officials have previously admitted to moving too slowly to stem an inflationary surge in 2021 and 2022, and have been wary of cutting rates too soon and accidentally reigniting inflation.
Photo: Sarah Silbiger, Reuters
Recent data indicates that inflation continues to slow toward the US central bank's long-term target of two percent, while economic growth remains strong and the labor market is showing signs of coming into better balance.
Against this backdrop, analysts will be looking for the Fed to signal that it may soon move ahead with an interest rate cut.
"We continue to see the first 25bp (basis point) cut in September followed by two more reductions in November and December," Deutsche Bank AG economists wrote in a recent note to clients.
Futures traders currently see a probability of more than 95 percent that the Fed will keep rates unchanged this month, and a 100 percent probability that it will move at or before its following rate decision in September, according to CME Group data.
Separately, US consumer confidence edged higher this month, but only because of a downward revision to the previous month's data, according to survey figures published yesterday.
The Conference Board's consumer confidence index (CCI) tallied 100.3, up slightly from 97.8 last month, which was revised down from its initial estimate of 100.4.
This month's figure was slightly higher than market expectations, according to Briefing.com.
"Confidence increased in July, but not enough to break free of the narrow range that has prevailed over the past two years," Conference Board chief economist Dana Peterson said in a statement.
"Even though consumers remain relatively positive about the labor market, they still appear to be concerned about elevated prices and interest rates, and uncertainty about the future," she said, adding that these are "things that may not improve until next year."
The Conference Board also asked consumers how they feel about the future, and found them to be "somewhat less pessimistic" than in June, Peterson said.
"Expectations for future income improved slightly, but consumers remained generally negative about business and employment conditions ahead," she added.
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