While Wall Street was in the midst of a selloff, the Federal Reserve began its policy meeting on Tuesday, during which central bankers are expected to provide additional signals about which tools they intend to employ to combat inflation and when.
A central bank spokeswoman announced the start of the policy-setting Federal Open Market Committee’s (FOMC) two-day meeting, which will finish Wednesday with a committee statement and press conference by Fed Chair Jerome Powell, which will be widely watched for clues as to what the Fed intends to do to address the increase in US prices.
Recent sessions have seen Wall Street shaken by concerns of tighter Fed policy. Indexes fell throughout last week, only to close with minor gains on Monday, following a session in which the indexes fell into negative territory before regaining some of their ground.
The Dow, the S&P 500, and the Nasdaq were all down in early Tuesday morning trade as investors absorbed the International Monetary Fund’s lower global growth prediction while waiting for the Federal Reserve’s latest policy announcement.
Following the central bank’s decision to cut its lending rate to zero and pledge to keep it there for a longer period of time in order to ensure that the economic recovery includes marginalised groups, the central bank is shifting its focus to contain inflation after consumer prices in the United States rose by seven percent last year.
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Their bond-buying programme to stimulate the economy will be completed by March, at which point they will raise interest rates to a more normal level. During the December conference, central bankers released their individual predictions, which indicated that rates may be raised up to three times this year.
As the Omicron variant of Covid-19 strikes business activity once more, the FOMC’s statement following the meeting, as well as Powell’s press conference, will be closely scrutinised for any indications of a deviation from that plan, including the possibility of more aggressive anti-inflation measures or signals of reluctance.