What to watch for at the Fed's latest meeting.
Jerome Powell, chairman of the Federal Reserve, listens during a Senate Banking Committee hearing in Washington, D.C., on Dec. 1, 2020.As the Federal Reserve concludes its two-day meeting on Wednesday, market participants are watching to see how — and when — the central bank will start winding down one of the biggest monetary policy experiments in at least a decade.
Consumers are seeing prices go up for gas, food, rent and restaurants — and they feel inflation is a real thing, whether the data shows it or not. “The market is fully anticipating that tapering begins this year,” Merz said. “[Powell] setting the stage for a November announcement is consensus at this point, and we think that's a high probability."
Materials released at the conclusion of this Fed meeting include the Federal Open Market Committee’s Summary of Economic Projections. The most widely scrutinized aspect of this analysis is the so-called “dot plot,” a graph depicting policymakers’ expectations of where the benchmark Federal Funds Rate will be throughout the next couple of years and over the longer term.
“It’s interesting to think about what counts as expectations, and interesting to think about what constitutes quote-unquote consensus,” said Tom Martin, senior portfolio manager at Globalt Investments. “It looks pretty much like there isn’t an expectation of a change in the dot plot for 2022. The following two years could be a different story, though,” he said. “The consensus is that if there is a change, it will be on the hawkish side.
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