FxWirePro: What to watch in FOMC meet ahead?

The U.S. Federal Reserve is in a hawkish mode, however, Fed chair Powell has recently signaled the possibility of rate pause going ahead. Since December 2015, the U.S. Federal Reserve has hiked rates eight times. It has hiked rates thrice this year in unanimous voting and forecasted one more hike over the remaining two meetings of the year.

FOMC will announce its December monetary policy decision today at 19:00 GMT.

The focus will be on the followings –

• Policy decision –Most of the analysts and economists expect the Fed to increase interest rates by 25 basis points. The market is pricing a 69.8 percent chance of a rate hike at today’s meeting.

• FED’s monetary policy statement – If the Fed follows through today’s rate hike forecast, then the market would look for additional clues for future meetings. But if a rate is not hiked, then the statement becomes ever more important, as there would be a new set of commentaries.

• Press Conference: Fed chair Powell is likely to get pressed by the media for the rationale behind today’s decision if rates are not hiked and clues to future monetary policy path. Chair Powell is also expected to ask about President’s criticism of rate hikes.

The meeting is expected to be a big mover, as the market is increasingly unsure of Fed’s next moves amid lower oil price and signs of weakness in global GDP growth.

The dollar index is currently trading at 96.83, down 0.15 percent for the day. The dollar is likely to drop significantly should the Fed decides to wait out and not hike at today’s meeting.