It has been understood that the question of concern at this point is the uncertainty about when the Federal Reserve will start reducing interest rates, and new details about the direction of the Fed discussed in the last FOMC meeting of 2023 on Wednesday.
Fed officials at their meeting in mid-December kept the key interest rate in a range of 5.25% to 5.5%, but gave an outlook indicating that most officials expect interest rates to fall by at least three-quarters of a percentage point as inflation gradually declines to the 2% target. Fed.
However, the end-of-year projections left doubts about when the rate cut would be implemented, and Fed Chairman Jerome Powell in his press conference after the meeting insisted that the matter had not been a major topic of discussion.
Minutes of the December 12-13 meeting, scheduled to be released early Thursday morning, are likely to give an indication of how close policymakers feel they are to the point where monetary policy needs to be moved to support a "softer path" with inflation continuing to fall without affecting the job market. .
The main personal consumption price index for November was reported down. Over the six months from June to November, core PCE inflation was slightly below the 2% target. This could indirectly push the Fed towards an earlier rate cut.
Powell warned that rates need to come down before inflation returns to the 2% target because otherwise "it will be too late," and policy will be more restrictive including risks to the job market that are greater than necessary.
Deutsche Bank economists said they felt the Fed would start cutting rates in June, but if inflation data was weaker than expected "a first rate cut as low as March is reasonable."
