Will FOMC Meeting Subtle the Inflation Sooner?

• The next FOMC meeting is scheduled on June 13-14, 2023.
• The expectation of no hike to prevent the inflation rates is high.

During the last Federal Open Market Committee (FOMC) meeting in May, the chairperson of the Federal Reserve System (FED), Jerome Powell conveyed that the Central Bank in the U.S. won’t be proceeding with the hikes but rather will halt for a period. However, the upcoming FOMC meeting on June 13-14 abruptly describes that there will be no increase in interest rates. Furthermore, this is the first-ever time throughout the year as the economy focuses on historical impact. 

Following the poll conducted among economists, it is noted that >90% of them prefer holding the federal funds rate at 5 to 5.25% once the forthcoming FOMC meeting ends. Meanwhile, very few of them expected a 25 basis point rise. 

On the other side, the inflation rates are measurably 4.4% as per April’s report from Fed while the central bank hits a 2% inflation target. Correspondingly, the market tends to hit the momentum whereas the inflation rates are gradually slowing down though an employment crisis occurs.

Will The Coming FOMC Meet Address Inflation?

The chief U.S. economist named Andrew Hollenhorst, the one among the fewer ones who expect a 25-basis point increase in the next two FOMC meet. He added:

“There is not a substantial economic difference between raising policy rates in June or doing so in July. But communicating why rates should not rise in June, despite data to the contrary will be challenging.”

Also, 1/3rd of the voters have disguised saying that the Fed would consider the hike at least another time in 2023. If this is happening in June meet then it would be following the Bank of Canada which literally hiked overnight with an increase to 4.75%. Additionally, mentioning that the central banks in Canada were kept on hold since January. 

Another chief U.S. macro strategist named Oscar Munoz said: 

“The longer they don’t hike, the longer the economy is going to continue expanding above trend … the longer you postpone that decision, the harder it is going to be to bring inflation lower.”

Henceforth, there is a quiet expectation among the market that if the FOMC meeting doesn’t end up with an increase or a hike, then the inflation rates would definitely remain above 2% for three consecutive years.