Scheduled for release on Wednesday, February 21 at 2:00 PM ET, the US FOMC meet minutes hold potential significance for understanding recent trends in Federal Reserve policy, particularly regarding interest rates.
Will US Fed cut interest rates in 2024?
At the previous meeting, the US Fed communicated its reluctance to cut interest rates unless a noticeable decline in inflation occurred.
However, recent consumer price index (CPI) data contradicts expectations, indicating a slower-than-anticipated decline in inflation.
Amidst mixed economic signals, including a decline in retail sales attributed to winter conditions, speculation arises regarding potential drastic actions by the central bank if economic conditions worsen.
Forecasts suggest a 44% likelihood of a rate cut in May, reflecting market sentiment.
Us inflation data still higher than expected
Surprisingly high US inflation data for January, with the CPI at 3.1%, challenges expectations and may prompt the Federal Reserve to delay its monetary easing program.
Despite predictions, the core CPI figure remained unchanged at 3.9%, leading to considerations of a delayed rate cut, potentially starting in July rather than earlier as anticipated by the market.
Currently maintaining interest rates within the range of 5.25% to 5.5%, the Federal Reserve’s next moves remain uncertain.
How are the markets placed?
On Tuesday, the EUR/USD pair surged to a two-week peak, almost reaching 1.0840, propelled by a widespread decline in the US Dollar (USD).
However, the USD staged a recovery during the US trading session as American markets resumed operations after an extended weekend.
This pushed the EUR/USD back above the 1.0800 mark, marking its first ascent in a week as the pair aims to initiate a bullish rebound.
Gold prices also showed resilience on Tuesday.
Market participants keenly await the FOMC meeting minutes and speeches from Fed officials to glean insights into the central bank’s stance on policy easing and potential rate adjustments later in the year.
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