The reporter reported that Today (February 1, 2023), the Dow Jones Industrial Average at 9:35 p.m. Thai time dropped to 33,880.45 points, down 205.59 points or 0.6% because investors were selling to reduce their risk. Before knowing the outcome of the monetary policy meeting of the Federal Reserve (Fed) tonight
The Fed will announce the results of its monetary policy meeting tonight at 2:00 AM ET, and half an hour later, Fed Chair Jerome Powell will deliver the results. Along with giving media interviews about the policy rate direction of the Fed this year
However, in this meeting Fed policy interest rate expectations (Dot Plot) will not be disclosed, as well as US inflation, unemployment and economic growth expectations.
However, investors give almost 100% weight in the forecast that The Fed will announce a 0.25% rate hike after the monetary policy meeting ends tonight. This is the Fed’s first monetary policy meeting this year.
In addition, investors expect such After the Personal Consumption Expenditure Index (PCE), Consumer Price Index (CPI) and Producer Price Index (PPI) all indicate that US inflation has peaked.
Meanwhile, the market expects the Fed to raise interest rates by another 0.25% at its March meeting. Including reducing interest rates at the September meeting. which is faster than expected
Investors also expect the Fed to raise interest rates as high as 5.0% this year, below what the Fed had previously signaled of a hike to 5.1%, or equivalent to its target range of 5.00-5.25%.
As for the CME Group’s FedWatch Tool, investors expect the Fed to raise interest rates by 25 basis points to a range of 4.50%-4.75% at its Jan. 31-Feb. 0.25% to 4.75%-5.00% at the March 21-22 meeting before the Fed kept interest rates at that level.
In addition, investors expect the Fed to cut interest rates at its September 28-29 meeting earlier than expected. The Fed has previously signaled that it will cut interest rates as early as 2024.
The Fed accelerated interest rates last year to curb inflation. After Russia announced an invasion of Ukraine on February 24, 2022, causing the United States and Western nations to issue sanctions. This has resulted in severe energy and food shortages across the world. And it is the cause of the highest inflation in decades.
The Fed raised interest rates as many as seven times last year. By raising interest rates by 0.25% 1 time, 0.50% 2 times and 0.75% 4 times, resulting in a total Fed raising interest rates by 4.25%.
The Fed’s Monetary Policy Committee (FOMC) unanimously raised the short-term interest rate by 0.50% to a range of 4.25-4.50% at its December 2022 meeting. which is the highest level in 15 years.
With policy interest rate expectations (Dot Plot) Fed officials expect to continue to raise interest rates in 2023 and not to cut rates until 2024, with the Fed raising interest rates to the maximum. 5.1% in 2023 before the rate hike cycle ends. The level was the highest since December 2007.
After the Fed raises interest rates to 5.1% in 2023, or equivalent to the target range of 5.00-5.25%, the Fed will keep interest rates at that level for a period of time. to keep an eye on the impact of tightening monetary policy on the US economy
The Fed also expects to cut interest rates by 1.0% in 2024, bringing it down to 4.1% by the end of the year. And the Fed will cut interest rates by 1.0% in 2025 to 3.1%, before the long-term interest rate rises to 2.5%.
At the same time, the market is keeping an eye on the earnings release of listed companies. by Meta Platform, Facebook’s parent company Will announce earnings for the fourth quarter of 2022 after the market closes today.
Previously, Meta Platforms posted a lower-than-expected profit for the third quarter of 2022, while Reality Labs, the division created by Metaverse to support Metaverse products, posted lower-than-expected earnings in the third quarter of 2022. It posted a loss of $3.67 billion in the quarter. And if you look at the beginning of 2022, Reality Labs has lost $9.4 billion.
