The Fed’s Two-Day Policy Meeting Started Tuesday—Here’s What You Need To Know
![The Fed’s Two-Day Policy Meeting Started Tuesday—Here’s What You Need To Know The Fed’s Two-Day Policy Meeting Started Tuesday—Here’s What You Need To Know](https://i1.wp.com/www.investopedia.com/thmb/qIU3l5RfvEp_eytDJ9GyZu2kFuA=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/News-Story-Federal-Reserve-Preview-FINAL-2-d4a7d4079433481e8a6611db4f040ca2.png?w=780&resize=780,470&ssl=1)
Key Takeaways
- Federal Reserve officials’ two-day meeting for July began Tuesday.
- They are expected to hold their influential fed funds rate at its 23-year high.
- Many central bank watchers are looking ahead to when the Fed will begin to cut interest rates.
The July meeting of the Federal Reserve’s policy-setting committee started Tuesday, as central bank watchers await clues on when interest rates might be cut.
During its two-day meeting, the Federal Open Market Committee (FOMC) debates the course of the influential fed funds rate and other monetary policy topics. Committee members will also carefully craft their written statement during the meeting to indicate their current stance on the economy, which market watchers and economists parse word by word.
What Happens Behind Closed Doors?
Read more to get a peek behind the closed door of the Federal Reserve Open Market Committee’s meetings.
What Are Central Bankers Expected To Do?
Most economists and traders think the Fed will hold its benchmark interest rate when it announces its policy decision on Wednesday. The Fed has held the influential rate at 23-year highs since last July to slow the economy and, in turn, tame inflation.
And, to some extent, it has been working. While progress has largely stalled out so far this year, inflation is down significantly from its peak in 2022. The job market is softening through fewer hires, not more layoffs, which is exactly what the Fed has said it would like to see.
Where Do They Go From Here?
A few economists have made the case that central bankers should cut interest rates at their meeting this week, no matter how unlikely. On the opposite end of the spectrum, other economists say the Fed should wait until next year.
However, neither outcome is likely, even by the measure of those posing the theories. Most central bank watchers expect Fed officials will begin making cuts when they next meet in September. Despite the nonpartisan nature of the Fed, a rate cut in September could be controversial in an election year. However, the Fed has set a precedent of cutting before elections in the past.
Al Drago / Bloomberg / Getty Images
What Will Jerome Powell Say?
After the conclusion of the meeting Wednesday, Fed Chair Jerome Powell will hold a press conference at which he will most likely reiterate his recent comments.
Recently he has talked about how the U.S. central bankers’ focus will likely shift from fighting inflation to balancing their dual mandate of maintaining employment without reigniting price increases.
Economists don’t expect Powell to shed more light on the timeline of interest rate cuts at the press conference.
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