U.S. Markets open in 6 hrs 53 mins
  • S&P Futures

    3,902.00
    +4.25 (+0.11%)
     
  • Dow Futures

    31,241.00
    +39.00 (+0.12%)
     
  • Nasdaq Futures

    11,838.00
    -40.25 (-0.34%)
     
  • Russell 2000 Futures

    1,771.50
    -3.40 (-0.19%)
     
  • Crude Oil

    110.35
    +0.46 (+0.42%)
     
  • Gold

    1,845.10
    +3.90 (+0.21%)
     
  • Silver

    21.87
    -0.03 (-0.13%)
     
  • EUR/USD

    1.0562
    -0.0026 (-0.2429%)
     
  • 10-Yr Bond

    2.7870
    -0.0680 (-2.38%)
     
  • Vix

    29.43
    +0.08 (+0.27%)
     
  • GBP/USD

    1.2495
    +0.0020 (+0.1587%)
     
  • USD/JPY

    127.8500
    +0.0560 (+0.0438%)
     
  • BTC-USD

    29,357.48
    -1,051.01 (-3.46%)
     
  • CMC Crypto 200

    650.34
    -23.03 (-3.42%)
     
  • FTSE 100

    7,389.98
    +87.24 (+1.19%)
     
  • Nikkei 225

    26,739.03
    +336.19 (+1.27%)
     
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Fed policy: What to expect from the FOMC meeting this week

In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Yahoo Finance's Brian Cheung joins the Live show to discuss what to expect from the FOMC meeting this week, the Fed dot plot, and the Fed balance sheet.

Video Transcript

- And we also do have a key Federal Reserve monetary policy setting meeting as well. And for more on what to expect from that event, I do want to turn it over to Brian Cheung with more. Brian.

BRIAN CHEUNG: We do have a busy week. And there's something for everyone. I guess it's no surprise that I'm circling that FOMC meeting happening this week that's going to begin tomorrow, of course. We'll get the decision at 2:00 PM on Wednesday. This will be the first policy setting meeting of 2022. And what a meeting it will be when you consider that a lot of eyes are fixated on what the Federal Reserve policy tightening is going to look like over the course of 2022. Of course, the big lingering question being, how many rate hikes will we get this year?

Now when you look at the dot plot projections which we had gotten from the Federal Reserve in the last meeting in December, you saw the median member of that 18-member committee projecting three interest rate hikes through the course of 2022. But even since that mid-December meeting, the commentary that we've gotten from the Fed speak from the 12 regional bank presidents has suggested maybe they could get even more hawkish than those projections, which is a big reason why a lot of Wall Street firms are projecting now for interest rate hikes over the course of 2022.

But take a look at this note from Goldman that we had gotten over this weekend where Jan Hatzius noted that it's possible that the Federal Reserve could set up conversation for, quote, "a risk that the FOMC will want to take some tightening action at every meeting until the picture changes on inflation." Keep in mind, there are a policy setting meetings over the course of 2022.

But before we start talking about 25 or 50-basis point hikes we need to take a little bit of a pause and remember that this meeting, it is not expected that the Federal Reserve will raise interest rates at least on Wednesday. The big reason for that is because of the Fed balance sheet. The Fed is still expanding its balance sheet and continuing that crisis era policy of buying assets in the open market to message to markets its commitment to keeping interest rates low. The Federal Reserve set a course in December for that process to end in mid-March.

The Fed has said very clearly they want to finish that process before they start raising interest rates. So it seems like it's not until March that we'll start to see interest rate hikes on the table. But of course, we're going to get commentary from Fed Chairman Jay Powell in a conference on 2:30 on that Wednesday, which of course, will have the full coverage of right here on Yahoo Finance. Brian, Julie.

JULIE HYMAN: We will. Thanks so much, Brian. And thanks, Emily as well.