The Federal Reserve appears poised to take its first pause from its interest rate hiking agenda after 15 straight months. Now markets expect the Federal Open Market Committee on Wednesday to keep its benchmark lending rate in the range of 5% to 5.25%.
Ahead of the latest Fed policy meeting, investors will be anxiously awaiting the Fed’s quarterly dot plot in its Summary of Economic Projections. This report is expected to show a 5.1% police benchmark rate at the end of 2023.
“Discord on the FOMC is mounting,” Bloomberg Economics commented. “Those who prefer to skip a hike in June want to wait and see—given the long and variable lags of monetary policy—how 500 basis points of rate hikes to date are cooling the economy. More hawkish members are convinced rates aren’t yet restrictive enough, and the Fed shouldn’t risk falling behind the curve. We see a ‘hawkish skip’ as a way to maintain unanimity on the committee.”
With Fed Chair Jerome Powell scheduled to hold a press conference after Wednesday’s meeting, many are expecting that any potential pause this month will not be the last.