LAST MINUTE | All eyes are on the announcement of the Fed’s interest rate decision! A first in 22 years… When and at what time will the Fed’s 2022 rate decision be announced? What will the Fed’s decision be?

The Fed’s Open Market Committee (FOMC) will announce its highly anticipated decision on interest rates at 9:00 p.m. today. In March, the Fed raised interest rates for the first time in 3 years and raised the key rate by 25 basis points to 0.25-0.50%. Today, the key rate is expected to be reduced to a range of 0.75 to 1% with an increase of 50 basis points. If that expectation comes true, the Fed will raise interest rates by 50 basis points for the first time since 2000.

In taking its final decision, the Fed gave the signal for 6 interest rate hikes for the rest of the year. In the dot chart, the interest rate projection at the end of 2022 was 1.9%, while it was determined at 2.8% for 2023. Moreover, it was seen in the lawsuit Minutes from the previous meeting that Fed officials said increases of 50 basis points would be appropriate in future meetings.

As inflation in the United States hit a 40-year peak with an annual rate of 8.5% in March due to rapidly rising energy and food prices, expressions to be included in the text of the decision will be followed along with the Fed’s interest rate. decision.

POWELL’S EXPLANATION

While today’s decision is expected, hawkish statements from the Fed have guided the markets, especially in recent weeks. Fed Chairman Jerome Powell, who spoke from the Fed on April 21 during the panel on the global economy as part of the International Monetary Fund (IMF) spring meetings, said an increase in 50 basis points in interest rates was on the Fed’s table. meeting which will take place on May 3 and 4. Furthermore, Powell pointed out that inflation is already very high and that monetary policy is still supportive compared to the past, noting that it is necessary to act a little faster.

St. Louis Fed Chairman James Bullard stressed that the Fed should take more drastic action and said the 75 basis point interest rate hike had already been made and was not the end of the world.

CONTINUED IN JUNE

Although the expectation of a 75 basis point hike for the next meetings is beginning to take shape, most analysts and financial institutions agree that a 50 basis point interest rate hike will be done today. Economists participating in the Bloomberg survey predicted that the Fed will raise interest rates by 50 basis points at meetings in May and June. 48 economists surveyed predicted the Fed would raise interest rates to a range of 2.25-2.5% by December.

Eighty-five of 105 economists polled by Reuters said they expected a rate hike of 50 basis points from today’s meeting. 56 economists said they also expect a 50 basis point rate hike from the Fed in June.

Goldman Sachs also announced in its latest report that it plans to raise interest rates by 50 basis points at meetings in May and June. Japanese financial firm Nomura said it expects interest rates to rise 50 basis points at its May meeting and 75 basis points at its June meeting.

THE REGRESSION HAS BEEN UNDER

Especially since Powell’s statement on April 21, markets have started pricing in interest rate hikes in May and June. The price of an ounce of gold has lost 4% since the said date and has fallen to 1870 dollars. Today, he started the day following a horizontal course.

DOLLAR INDEX REACHES 20-YEAR HIGH

Similarly, the dollar index, which shows the performance of the dollar against major currencies over the past month, rose 5%. Thus, the index reached its highest level since December 2002 with 103.93. In this process, the euro/dollar parity also fell below 1.05, reaching its lowest level for 5 years.

TL DROP IS LIMITED

While the dollar has strengthened overall, the depreciation of the TL has been limited. The dollar/TL is up 1% over the past month. There was a 0.1% rise in dollar/TL this morning and the price around 14.84 continued.

Analysts said that in the event of a 50 basis point increase in interest rates in line with expectations, the pricing has already been done and it will not cause the dollar to move significantly and below. In the announcement of the decision, signs will be sought for a rise of 50 basis points or 75 basis points, in particular for the next month.




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