Forecasting the Fed: Anticipating the Interest Rate Announcement Tonight

The Federal Reserve is expected to announce its interest rate decision on Wednesday, June 14, 2023. Here are some expectations .

The Fed has raised interest rates sharply since March 2022, pushing them to just above 5 percent in the fastest series of rate increases.Some Fed officials have said they still believe more rate hikes are necessary to successfully bring down inflation to the central bank’s 2% target.
Fed Chair Jerome Powell will likely clarify in his news conference at 2:30 p.m. ET on Wednesday that a rate hike in July is still in play.
The Fed may take a breather this month, but Powell will likely clarify that a rate hike in July is still in play.
The Fed is likely to signal that, if necessary, it will increase interest rates in the future in order to cool the economy. But, at least for this month, experts believe the central bank is likely to say it will take a wait-and-see approach to assess the impact of its aggressive rate-hiking program. That means a pause could be on the horizon.

The Fed is set to release its latest Summary of Economic Projections on Wednesday, a set of forecasts from Fed officials for various economic indicators. The quarterly update will reflect the likely path of interest rates.
The Fed may signal the likelihood of a future rate hike in the quarterly economic projections the policymakers will issue. The projections may show that the officials expect their key rate to rise a quarter-point by year’s end — to about 5.4%, above their estimate in March.

The Fed raised its rate by a substantial 5 percentage points in 14 months — the fastest pace of increases in 40 years, to a 16-year high. The policymakers hope that the resulting tighter credit will slow spending, cool the economy and curb inflation. Yet several Fed officials contend that rates are already high enough to slow hiring and growth and that if they go much higher, they could cause a deep recession. This concern has left policymakers deeply divided about their next steps.
Markets have priced in a near-100% probability that the rate-setting Federal Open Market Committee will approve a quarter percentage point increase at the conclusion of the two-day meeting. That will mark the 10th increase since March 2022, taking the Fed’s benchmark borrowing rate to a target range of 5%-5.25%