The Federal Reserve (Fed) is widely expected to signal at this week’s meeting that it is ready to raise interest rates in March, once its bond -buying program ends.
With the U.S. inflation rate nearly hitting a 40 -year high, Fed policymakers are certainly worried about this situation forcing them to act faster.
The question that plays in the minds of market players at this point is how many central banks will raise rates at one time and how many times will they do so?
For now, analysts have placed full expectations in a rate hike for March by 50 basis points.
Even so, if Chairman Jerome Powell fails to give any clues about the rate setting in March or a hawkish statement, it could affect the USD price movement.
However, expectations of a rate hike by the Fed have driven large price volatility in the stock market leading some to argue that this decline will undermine the central bank’s decision.
In the meantime, investors will also focus on discussions on the balance sheet reduction which Powell said earlier that it would not be done in the near future as it took longer to discuss.
Bond -buying programs have been a major contributor to the two -fold increase in their balance sheets. The termination of the program, expected in March, will likely pave the way for the Fed to consider reducing it.
