The Fed will announce its interest rate decision and monetary policies, at 18:00 GMT today. The FOMC press conference follow at 18:30 GMT.
Markets have been expecting a March rate hike for a long time, the expectations have been largely priced in since February. Therefore, even if the Fed Chair Yellen announces a rate hike today, it would be in line with market expectations.
The Fed will likely raise rates by 25 basis points this time, with rates in a range of 0.75% to 1%, which is the third rate hike in a decade. However, now what matters more is how many times the Fed will raise rates later this year, and its latest economic projections. In the December FOMC meeting the Fed had projected three rate hikes in 2017.
The Fed’s two main objectives are full employment and stable prices. The recent US labour market data shows the labour market remains solid. Inflation has also seen an uptrend since August 2016.
We can expect volatility; however, the volatility might not arise from the rate decision, but more from the updated economic outlook and new projections. If Fed Chair Yellen makes a relatively hawkish comment, then USD will likely keep on strengthening.
Nevertheless, if the Fed surprisingly doesn’t raise rates today, then it will also likely cause great market volatility with the likelihood of USD selling pressure.
Japanese industrial production was released this morning for January (YoY) reaching the highest level in 2017.
We will see the release of a series of UK and EU labour market data for January and February, between 09:30 – 10:00 GMT today, which will likely cause volatility to both GBP and EUR.
US retail sales and CPI data for February will be released at 12:30 GMT, which will likely cause some volatility to USD and the USD crosses, prior to the FOMC meeting.
On Thursday 16th March, there will be three central banks announce rate decisions and monetary policies. The Bank of Japan at 02:00 GMT, followed by the Swiss National Bank at 08:30 GMT and finally, the Bank of England at 12:00 GMT.
The market is predicting that the three central banks will likely keep rates unchanged.