Why what Federal Reserve chair Jerome Powell says today could have a bigger impact on the economy than Trump
The Federal Reserve will make its next interest rate decision on Wednesday afternoon, having potentially massive impacts on the stock market.
Fed Chair Jerome Powell will announce at 2pm the committees decision to either hold interest rates steady or make a cut.
The stock market has been on a turbulent ride over the last two weeks after President Trump’s tariff headlines sent the S&P 500 in to correction on Thursday.
Economists have warned a recession may be looming as Americans fall behind on auto loans and consumers long-term expectations for inflation soared to the highest levels since the 1990’s.
Analysts expect the Fed to hold rates steady but investors will listen carefully to Powell’s remarks for clues as to when the Fed might cut rates in the future.
An unexpected interest rate cut would send stocks soaring as lower rates makes borrowing money less expensive, and should mean cheaper loans and credit card rates eventually trickle down to consumers.
The Fed was in a rate cutting cycle until January when worrying signs of inflation ticking up again led to a pause.
The benchmark rate is currently between 4.25 percent and 4.5 percent, one percent lower than it was in the summer.
Fed Reserve Chair Jerome Powell will announce the interest rate decision this afternoon
Two weeks ago Powell said ‘the economy is fine’ but that rate setters were in ‘no hurry’ to cut again.
Markets however, are pricing in two to three more cuts by the end of the year.
The Fed will also publish its ‘dot-plots’ on Wednesday which indicate how many cuts they expect to make by the end of the year.
The projections also include the Fed’s expectations for growth and inflation.
Markets appear to be optimistic with the S&P 500 rising 0.7 percent higher in the first hour of trading.
