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Federal Funds Rate

Federal Reserve Headquarters
Event Date: Wednesday, January 31, 2024
Event Time: 19:00 CET

Traders Looking at FED Dot Plot for Rate Guidance

Updated Sunday, January 28, 2024
The Federal Reserve FED has been at the forefront of the normalization of monetary policy. It started hiking interest rates back in December 2015 and in the last two years, it has hiked interest rates eight times.  The markets are not expecting another rate hike this month since the last one was back in March. The FED cut interest rates by 25 bps in the last meeting in July 31 and they did so again in September, bringing rates back to 2.00%. They delivered a third cut in October, but they made it clear that they are done with rate cuts. But, coronavirus has panicked everyone and the FED cut rates by 0.50% twice in March, bringing them down to 0.25%. They might deliver another rate cut, to bring them to 0.10%, but that's out of the question right now, as the US economy has been expanding quite fast for some time now and inflation remains above 6%. The FED has been turning hawkish, having delivered many rate hikes of 25 bps, one 50 bps hike, and three 75 bps hikes but is expected to keep rates unchanged at 5.50%. However, traders are waiting to see if there will be a hint of another hike later on. Please follow us for live coverage of this event by experienced analysts.

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About Federal Funds Rate
The U.S. Federal Reserve (FED) is the central banking authority of the United States. It is comprised of members of the Board of Governors of regional U.S. FED branches. The FED meets periodically every five to eight weeks throughout the year to discuss the state of the U.S. economy. Employment, growth, inflation and the lending environment are topics formally addressed at FED conferences. The FED is commissioned with the task of managing U.S. monetary policy. This includes the setting and revising of interbank lending rates for the USD. In order to accomplish this objective, FED members vote on whether rates are to be raised, remain unchanged, or lowered at each meeting. A decision is then reached and announced to the public. A rate "hike" or raise, is a signal of tightening monetary policy amid inflationary pressures. Rate hikes typically strengthen the USD against other major global currencies. Conversely, holding rates steady or cutting rates is a signal of “dovish” policy. These actions commonly lead to the USD weakening and devaluation across the majors.
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