The U.S. Federal Reserve is scheduled to announce its forthcoming policy decision on December 18, with a widely expected interest rate reduction of 0.25%. Nevertheless, the outlook for Fed policy following this week remains ambiguous. While additional rate cuts are anticipated, any alterations in the magnitude and speed of the expected future rate reductions could have a substantial impact on the markets.
Upcoming Federal Reserve Meeting on December 18
This week features a range of U.S. economic data releases, including November retail sales, industrial production, personal income, personal spending, and various housing statistics. Nevertheless, the Federal Reserve's decision in December is anticipated to have the most significant impact on the market in the coming week. This announcement is expected to be particularly crucial for the markets, as it represents one of the final major data points of the year, and trading volumes are likely to decrease next week in anticipation of the holiday season.
The Federal Reserve will reveal its next interest rate policy decision on December 18 at 2 p.m. ET, accompanied by the release of projections from the Federal Open Market Committee. A press conference led by Fed Chair Jerome Powell will take place at 2:30 p.m. ET, immediately following the issuance of the Fed's statement.
A reduction in the Federal Reserve's interest rate is highly expected. Prestige Economics has been predicting this rate cut since September, and the most recent Fed projections from September 18 also indicated expectations for an additional rate cut within this year.
As per the CME FedWatch Tool, the probability of a 0.25% interest rate cut by the Federal Reserve on December 18 stood at 96% as of December 15 at 11:04 a.m. ET, while the likelihood of maintaining the current policy was merely 4%.
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