The Federal Reserve (Fed) is edging closer to cutting interest rates as inflation cools and job creation steadies. With the bank expected to leave borrowing costs unchanged, all eyes are on Fed Chair Jerome Powell's tone. Live coverage.
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Why the Fed decision matters for markets
The Federal Reserve is the world's most important central bank, and every hint it releases about future policy rocks markets. The bank's interest rate has been stable at the high range of 5.25-5.50% since July 2023, and will likely remain so at the July 2024.
Nevertheless, there is a growing consensus that Fed Chair Jerome Powell and his colleagues will oversee the first rate cut in September, when the bank meets again.
Underlying inflation has been low at 2.6% according to the Personal Consumption Expenditure (core PCE), the bank's preferred gauge. Moreover, the labor market has been cooling down, with the unemployment rising to 4.1% despite ongoing hiring.
Both figures seem incompatible with a high interest rate. Gold and stocks would surge on prospects of lower rates, while the US Dollar would suffer. A hawkish stance would hit the precious metal and equities, while boosting the Greenback.
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