The Federal Reserve is set to announce its latest interest rate decision on Wednesday afternoon. Fed funds futures currently show a 95% chance of a quarter-percentage-point interest rate cut. Investors are closely watching for clues from Fed policymakers' Summary of Economic Projections and Fed Chair Jerome Powell's press conference regarding future monetary policy.
The central bank is anticipated to moderate expectations of further rate cuts in the coming year, particularly as inflation persists. While a rate cut is widely expected, experts anticipate a hawkish tone from Fed officials, potentially leading to a stock market selloff. However, analysts believe that volatility following the Fed announcement is typically short-lived. Market performance on Fed days has generally been weaker during Powell's tenure compared to his predecessors.