The Federal Reserve's policy setting committee, the Federal Open Market Committee, concludes its two day meeting Wednesday with an interest rate announcement scheduled for 2 p.m. Eastern time, followed by a press conference from the Fed chair at 2:30 p.m.
The most likely outcome, according to market pricing, is that the Fed leaves its benchmark federal funds rate unchanged in a range of 3.75 percent to 4.00 percent. That would mark a pause after September's meeting, when the committee surprised many forecasters by raising rates a quarter point rather than cutting them, as had been widely expected earlier in the year. Minutes from that September meeting showed that all participants supported the increase and that nearly all saw the risks to inflation tilted toward the upside, leaving the door open to further tightening.
The shift reflects a bumpier path for inflation than policymakers had hoped. The Fed's statement in September described economic activity as expanding at a solid pace, with job growth keeping up with the size of the workforce and unemployment little changed, giving the committee room to prioritize price stability. Longer term borrowing costs have moved up sharply as a result, with the 10 year Treasury yield climbing to around 5.15 percent, a level that affects everything from mortgage rates to corporate borrowing costs.
Fed Vice Chair Philip Jefferson signaled that the committee intends to take its time, saying policymakers will need to come to their own judgment, which may take more time. This particular meeting will not include an updated Summary of Economic Projections, the quarterly set of forecasts and the closely watched dot plot showing individual officials' rate expectations, which is typically released only four times a year. Investors are increasingly focused on whether the committee will raise rates again at its next meeting, scheduled for December 8 and 9, when the updated projections will return.
Watch for the Fed's statement language on inflation risks, Wednesday's press conference for any hints about December, and upcoming data including the September PCE inflation reading due Thursday and the October jobs report due November 6.
Is the Fed expected to cut rates Wednesday?
No, a cut is not the base case; most forecasters and market pricing point to the Fed holding rates steady after September's surprise increase.
When is the Fed's next meeting after this one?
The next scheduled FOMC meeting is December 8 and 9, which will include an updated Summary of Economic Projections.