WASHINGTON–The Federal Reserve’s Open Market Committee will begin two-days of meetings today, with markets widely expecting the FOMC to announce a 25-basis point increase in rates when the meeting concludes tomorrow.
While such a move would mark another boost in rates, a 25-basis point increase would actually be smaller than the increases seen during 2022 and a signal the Fed believes inflation is coming under control as the economy slows.
NAFCU’s chief economist and VP of research, Curt Long, said another 25-basis point increase is anticipated when the FOMC meets in March, followed by a “sustained pause.”
“I think the interest in this meeting is going to be whether the Fed adds anything to their statement to either sort of confirm or push back on that expectation,” Long said. “After a series of successive 75-basis point hikes, I think it was at their November meeting that the Fed added a statement about how much tightening had already occurred and that these things do sort of operate on a lag. That was the signal to everyone that they were about to sort of moderate their rate hikes going forward. The Fed likes to foreshadow these things when they come to big milestones and, so, if it is the case that they are expecting to pause in the near future, that may be something that they want to signal to markets starting with this statement.”
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