Will the FOMC Meeting Spark Key Changes to Interest Rates?
Investors and traders have been anxiously awaiting the Federal Reserve meeting, where interest rate policy is set. Markets have been unusually quiet, trading lower in advance of the meeting, even though the central bank is not predicted to make any significant policy actions. Stock index futures and ETFs were largely unchanged in Wednesday morning trading, with funds like the Vanguard Total Stock Market ETF (VTI) and iShares Core S&P 500 ETF (IVV) dipping marginally, as investors await the 2 PM Fed statement and Chairman Jerome Powells subsequent news conference. The Federal Reserve has been championing low rates and bond purchases in support of a full economic recovery for over a year now, but some economists suspect the Fed may mention the potential for a tapering of its bond-buying program, as well as the possibility of an initial rate increase in 2023. I think the commentary and the press conference will be interesting. Theres clearly a division on the board and among the Fed presidents about how strong the economy is, and whether its time to start evolving the policy, said Rick Rieder, chief investment officer global fixed income at BlackRock. How the chairman describes that is going to be very interesting. Its hard to say its [going to be]hawkish because  I think its going from uber dovish to overly dovish.  With inflation increasing and signs of an economic recovery emerging, some Fed officials expressed that it could be the right time to begin discussing a plan for fine-tuning the rate of bond purchases, based on the meeting minutes. With the pandemic still not fully under control, economists dont see Fed officials making immediate changes however.