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Here's one thing that could be bigger than today's Fed announcement

Myles Udland
Markets Reporter
Donald Trump

As usual, President-elect Donald Trump’s Twitter account is the space to watch this afternoon.

The major market-moving event of the day — and the final such event of 2016 — will be the Federal Reserve’s latest policy statement, due out at 2 p.m. ET. Following the statement, Fed chair Janet Yellen will take questions from reporters for about an hour.

The Fed is expected to raise interest rates by 25 basis points to a range of 0.50%-0.75%. This would mark the second straight year the Fed raised rates at its December meeting and the second time since the financial crisis benchmark interest rates have been raised in the US.

But in his widely-read daily note out Wednesday morning, UBS director of floor operations Art Cashin warns traders that the big news out of Wednesday’s Fed action might not be the Fed’s statement itself, but anything we hear from Trump.

“During the campaign, Mr. Trump was critical of Chair Yellen and the Fed, accusing them of being politically motivated by not hiking rates before the election,” Cashin writes.

“But, as President, would Mr. Trump want a more hawkish Fed? We think his economic advisors would likely counsel otherwise. We may get a clue this afternoon. The Fed will hike 25 [basis points]. Yellen will likely take a future wait and see policy. Will Trump tweet hostilely, saying they hiked rates now that I’m in? So, if there’s a tweet, its tone may be just as important as the rate hike and maybe even more so.” (Emphasis added.)

UBS’s Art Cashin

Since Trump’s election, the Fed’s relationship with the new administration has been a particular point of curiosity for markets. Initially, some speculated Yellen would step down after Trump’s election, but the Chair made clear that will not be happening in testimony just weeks after the vote.

Additionally, there are currently two open seats on the Fed’s Board of Governors that Trump will likely look to fill, and whom Trump nominates to fill these roles will certainly shape the future of Fed policy over the next four years.

During the first presidential debate, Trump said the Fed was “doing political things” by keeping interest rates low. At her September FOMC press conference, Yellen said, “We do not discuss politics at our meetings and we do not take politics into account in our decisions.”

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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