The U.S. Federal Open Market Committee is in the midst of a two-day policy meeting after flagging off a historic interest rate hike cycle in December but a slowdown in China and convulsions in global markets could steer it off its course later this year.
After all, the Chinese equity and currency markets have had a rocky start to the year and the world’s second-largest economy is growing at its slowest pace in 25 years. Meanwhile, crude oil prices have plunged to fresh 12-year lows below $30 a barrel, prompting fears of a global recession.
That presents an inclement backdrop for the Fed, whose projections imply four interest rate increases this year.
“The main thing to look out for this week is how much emphasis (the Fed is) going to put on international developments; I think they will highlight these issues again like how they’ve done occasionally in the past and I think that will bring market expectations down to somewhere like one more (rate hikes) this year, maybe two,” said Jesper Bargmann, Nordea Market’s Asia trading head.
“They will mention something (about) the global economy affecting the U.S. economy.”
via CNBC
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.