More Rate Hikes Coming In 2023?: What To Expect From US Fed Meet

The US Federal Reserve is set to raise interest rates on Wednesday, effecting what will be the highest rates since 2001. The market is certain that the United States central bank will deliver a 25 bps rate hike, taking the current target rate to the 525-550 bps range. Meanwhile, it remains to be seen how the Federal Open Market Committee (FOMC) views the future interest rate probabilities as the economy is yet to show strong signs of weakening. The larger market expectation is that the US Fed would deliver yet another rate hike until the end of 2023.

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On Wednesday, CNBC reporter Steve Liesman said the guidance from the Fed on whether there will be further hikes in the current market cycle. Meanwhile traders project a 19% chance of a rate hike in the September meeting while showing a 40% chance of a hike in the November meeting.

The Federal Reserve is expected to resume rate hikes today, after a one-meeting pause. @SteveLiesman joins with more: pic.twitter.com/CrP4owTCJS

— Squawk Box (@SquawkCNBC) July 26, 2023

More Fed Rate Hikes To Come?

Since the last FOMC meeting in June 2023, the unemployment rate dropped slightly while the consumer price index (CPI) saw a major change with a drop to 3% from 4% in June. However, the economy is still to show signs of weakening, which could force the US central bank to enforce further monetary policy tightening. Over the next one year, analysts expect that the Fed will deliver rate cuts gradually.

On the other side, the Fed’s interest rate hike decision today will bring the rate to its highest since 2001. The CME FedWatch Tool, which assesses the likelihood that the Fed will change the Federal target rate, shows a 96.5% chance of a 25 bps rate hike in the upcoming meeting.

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