The U.S. Federal Reserve is expected to raise interest rates by 25 basis points on Wednesday, continuing its trend of long on inflation anxiety and short on interest rate surprises according to the Federal Open Market Committee (FOMC). The CME Rate Watch tool is forecasting a 98% probability of a quarter point increase that would raise the federal funds rate to a range of 5.25 to 5.50 basis points – its highest level in roughly 17 years. The FOMC statement following its decision suggested that inflation remained concerning and that further rate hiking was possible.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook, FOMC said. Crypto markets have been curiously resistant to the latest macroeconomic utterances, trading in a range between $29,000 and $31,500 for much of the past two months.
On Tuesday, the Conference Board will release its latest Consumer Confidence Index (CCI), which reflects sentiment about the economy. Thursday reports on jobless claims will offer the latest data on economic growth, while Friday’s Personal Consumption Expenditures (PCE), a favored inflation measure of the Federal Reserve, could buttress the bank’s latest move – or not.
The Federal Reserve will take its latest steps in trying to reduce inflation to its long-sought goal of 2%. The June 3% reading continued an encouraging trend, slightly beating expectations and dropping from 4% in May. Last month, the CCI soared to 109, up seven points from May and its highest level since January 2021. Last week’s jobless claims turned for the worse last week, at least for analysts and investors hoping for signs the job market would cool. May durable goods orders rose 1.7%, their third consecutive monthly gain, offering another sign that the U.S. economy was doing anything but shrinking. PCE has declined steadily over the past year, another upbeat signal for inflation watchers.