Fed on global markets' radar

All attention in global markets is on the Fed's interest rate decision. According to Bloomberg Economics, the Fed's failure to raise interest rates in its third consecutive meeting will signal the end of the tightening cycle. Global markets are showing mixed trends ahead of the Fed's interest rate decision. In Asia, the impact of the Chinese government's failure to announce strong incentives to support the economy is felt in the falling Chinese CSI 300 and Hong Kong Hang Seng indexes. Japan's Nikkei 225 is up. US stocks, which closed higher on Tuesday, continue their limited gains in futures. The Bloomberg Dollar Index, which fell 0.22 percent on Tuesday, is flat this morning. The US 10-year bond yield extended its losses to a second day. The US Federal Reserve will announce its final interest rate decision for 2023 at 22:00. The median expectation of economists participating in the Bloomberg survey is for the policy rate range to remain at 5.25-5.50 percent. While November consumer inflation data came in line with expectations on the core side, they supported expectations that the Fed will not rush to declare victory in the fight against inflation and cut interest rates in 2024. Bloomberg US Chief Economist Anna Wong stated that the Fed’s failure to hike interest rates in the last two meetings could be seen as a “temporary break,” but that the Fed is not expected to take any steps at this meeting either and that a third consecutive break would mean the end of the tightening cycle. Wong, who said, “Officials will discuss under what conditions they can begin cutting rates next year,” thinks that Fed Chair Jerome Powell, who will hold a press conference after the decision is announced, will reject the view that interest rate cuts will begin very soon. Wong assessed, “Instead, Powell will paint the picture that the committee’s discussions on interest rate cuts are in the very early stages of ‘thinking about considering cuts.’” Bloomberg Economics expects the Fed to cut interest rates by a total of 125 basis points next year, starting in March 2024.