FED MEETING — What you need to know in markets on Wednesday

Markets Reporter
Yahoo Finance

Wednesday is Fed day.

At 2:00 p.m. ET, the Federal Reserve will release its latest policy statement, which is expected to indicate the central bank raised the target range for its benchmark interest rate to 1.75%-2% at its two-day meeting which kicked off on Tuesday.

Along with the policy statement the Fed will also release an updated summary of its economic projections, which includes the “dot plot” that indicates where Fed officials see interest rates in the future.

This plot showed Fed officials in March were roughly split on whether two or three additional rate hikes would be warranted this year. On Wednesday, this plot will likely show that either one or two rate hikes is the median forecast among Fed officials.

Wednesday’s statement and projections will also be followed by a press conference with Fed Chair Jerome Powell, which is set to begin at 2:30 p.m. ET.

A likely question Powell will face is whether the central bank has made any decision regarding the frequency of its press conferences. Namely, will Powell schedule a press conference after each of its 8 yearly meetings, or will the current schedule of quarterly press conferences hold.

Federal Reserve Chairman Jerome Powell speaks following the Federal Open Market Committee meeting in Washington. Investors are eagerly awaiting the updated economic forecasts the Fed will issue when its meeting ends Wednesday, June 13. (AP Photo/Carolyn Kaster)
Federal Reserve Chairman Jerome Powell speaks following the Federal Open Market Committee meeting in Washington. Investors are eagerly awaiting the updated economic forecasts the Fed will issue when its meeting ends Wednesday, June 13. (AP Photo/Carolyn Kaster)

The Wall Street Journal wrote Tuesday that Powell is “considering” a move to an eight-times-a-year press conference schedule, a move that could make each meeting “live,” meaning that investors would take seriously the possibility that interest rates could move up at any meeting.

Since the crisis, the Fed has only raised interest rates at one of its quarterly meetings that were already scheduled to be accompanied by a press conference with the Fed Chair.

Outside of this issue, expect Powell to be questioned about the state of the labor market, the impact trade tensions could have on economic growth, while a small technical adjustment in the interest rate the Fed pays banks for its excess reserves could also be storylines on Wednesday.

Elsewhere on Wednesday, the economics calendar will bring investors the May data on producer prices, which is expected to show prices rose 2.8% over the prior year in May. This data follows a reading on consumer prices in May which also showed a 2.8% annual increase as signs of inflation pressures building in the economy continue to add up.

Following Tuesday’s inflation data, Michael Pearce, senior US economist at Capital Economics, said that while part of the rise in consumer prices was due to a rise in gas costs, “We expect underlying inflation to trend gradually higher from here, which will prompt the Fed to hike rates twice in the second half of the year.”

And on the earnings front, the quiet week for corporate results will continue no major companies set to report results.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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