Yahoo Finance's Brian Cheung joins the Live show from Washington, D.C., to break down what to expect from Wednesday's FOMC meeting.
AKIKO FUJITA: All eyes on the Federal Reserve as the FOMC wraps up its two-day policy meeting. Investors expecting another 75 basis point hike as the central bank looks to cool down red hot inflation. But the big question for Fed Chair Jay Powell-- how far is he willing to go beyond this meeting?
Let's head out to Washington, DC, where our very own Yahoo Finance's Brian Cheung is standing by for us. Brian, as always, we're going to be looking to that 2:30 press conference to see if we get any more guidance on how much more aggressively the Fed plans to move.
BRIAN CHEUNG: Hey, morning, Akiko. Well, 82 degrees down here in Washington, DC. It's going to heat up to 87 degrees. I mean, that's as hot as the inflation that we find ourselves in, in this economy. 9.1% on a year over year basis in the month of June. That's a big reason why the Federal Reserve says it wants to continue the pace of interest rate hikes that it's been embarking on over the course of 2022.
All expectations point to another 0.75 percentage point interest rate increase at the conclusion of the meeting today this afternoon at 2:00 PM. Now that's going to be the same size as we got in June. Market expectations overwhelmingly saying that's what it's going to be, although you do see about a 20% chance of perhaps a one percentage point increase.
But of course, the Federal Reserve unlikely to do that, given the fact that if they did perhaps want to go with that upside surprise, they probably would have messaged it last minute, like we got in that last June meeting. But the natural question is not going to be what's in the statement itself. It seems like most of the language is likely going to be the same.
The focus is going to be on the Fed Chairman's press conference at 2:30. What does he say about the three remaining meetings for the end of this year in September, November, and December? Is it going to be another 75 basis points in the next meeting? Maybe one percentage point still on the table? We don't know, and that's so important because the Fed, after this meeting, will have interest rates in the estimate of neutral, between 2.25%, 2.5%.
That's the point where any further interest rate hikes will be classified as restrictive and could have a stronger bite into inflation as the Fed tries to engineer that soft landing. All eyes and ears are definitely going to be on that 2:30 press conference, which, of course, we'll have the full coverage of right here on Yahoo Finance.