The Federal Reserve is set to go “live” again.
While Wall Street pros don’t think the nation’s central bank will opt to hike interest rates when Wednesday’s two-day meeting breaks up, a growing number of investors believe the Janet Yellen-led Fed will hint, either in the policy statement at 2 p.m. ET or in a press conference 30 minutes later, that meetings in April and June will be “live,” meaning they could — if data gives them the green light — resume rate increases in coming meetings.
The Fed’s decision to forgo a second rate hike for the time being is an indicator of the uncertainty present in today’s economy. The almost daily whipsaw effect of good news/bad news in leading economic indicators is causing the Fed to take a fairly conservative stance with regard to interest rates. And while it’s possible that rate hikes will resume in the next meeting or two, the Fed’s guidance of potentially two hikes this year (as opposed to the three or four hikes previously assumed) suggests a cautious approach in 2016.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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