Fed interest rate hike outlook due next week carries risk of hawkish surprise
In the run up to next week’s Federal Reserve policy meeting, the timing of future interest rate hikes is drawing the attention of bond traders and analysts.
While the anticipated tapering of the Fed’s bond purchases this year has dominated much of the discussion so far, it’s the interest-rate outlook from the Fed that is likely to provide new information and may be market-moving.
For the first time, policy makers will be releasing their expectations for where the fed funds rate target will end up in 2024 and some say the market is already underestimating the risk of the Fed delivering a hawkish surprise in the form of more rate hikes than expected over the next three years.
Tuesday’s U.S. inflation report, showing a slowdown last month in the recent price surge, had investors lowering their expectations for how much the Fed is likely to…