There was a time long, long ago when Federal Reserve meeting announcements would come a surprise to market participants.
They might cut rates. They might hike rates. You just didn’t know.
That has all changed.
Since June 2009, there have been 92 FOMC Meetings…
- Before 80 of those meetings, the market was pricing no change in rates and the Fed held rates unchanged.
- Before 9 of those meetings, the market was pricing in a 25 basis point (bps) rate hike and the Fed hiked 25 bps (0.25% hikes in Dec 2015, Dec 2016, Mar 2017, June 2017, Dec 2017, Mar 2018, Jun 2018, Sep 2018, and Dec 2018).
- Before 3 of those meetings, the market was pricing in a 25 bps cut and the Fed cut 25 bps (0.25% cut in Jul 2019, Sep 2019, and Oct 2019).
- Last year, ahead of the March 18 meeting which was later cancelled, the market was expecting two emergency rate cuts and Fed indeed cut rates in unscheduled meetings on March 3 (50 bps cut) and again on March 15 (100 bps cut).
The playbook: whatever the market expects the Fed to do, the Fed does. With the market currently expecting no change in interest rates tomorrow, that is precisely what we’ll see.
Here’s tomorrow’s news, today…
January 27, 2021
BREAKING: FED HOLDS SHORT-TERM INTEREST RATES AT 0%. POWELL SAYS THERE IS NO INFLATION, PROMISES TO KEEP BUYING BONDS UNTIL ALL YIELDS ARE NEGATIVE.
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Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For our full disclosures, click here.