FxWirePro: What to watch in FOMC meet ahead?

We expect a great deal of debate among FOMC policymakers over the path of the hike as well as whether to go for another hike this year or not. Since the last meeting in September, several policymakers openly supported a faster rate hike, while some of them scaled back their tone after inflation report was disappointing as well as several other data in September. Fed Chair Janet Yellen, despite maintaining her hawkish rhetoric said that low inflation remains a mystery.

A majority of the Federal Reserve policymakers voted in favour of a hike in June, which shows despite the differences FOMC board remains more or less united.

FOMC will announce its monetary policy decision at 18:00 GMT.

Focus will be on the followings –

• Policy decision –Most of the analysts and economists expect FED to hold interest rates steady at the current level of 1.00-1.25 percent. The market is pricing greater chance of no hike today. The market is pricing only 1.5 percent chance of a hike today. The next hike is priced in December with 98.2 percent probability.

• FED’s monetary policy statement – With no press conference scheduled, the focus would on the statement, looking for a hint on a rate hike in future.

Despite the importance of FOMC for the financial market volatility, today’s meeting is likely to be a quiet one as none expects a hike, no projection material to be released and no press conference afterwards. Little or no changes are expected even in the statement. However, Fed may provide updates on its tapering, which has begun in October.

The dollar index, which has been rebounding since September after its worst H1 performance in several decades unlikely to take much notice of the meeting. The index is currently trading at 94.5, up 0.07 percent so far today.