empty
10.08.2022 07:10 AM
Most likely scenario of FOMC meeting in September

This image is no longer relevant

The main US indices – DOW Jones, NASDAQ, and S&P 500 – edged lower on Tuesday, descending for the third consecutive day. Could that be the beginning of a new downtrend cycle in the US stock market? As a reminder, we believe that the bear market is not over yet. A few weeks ago, it was possible to assume the Fed would stop once the interest rate reached 3.25-3.5%. Today, it seems unlikely. Inflation is still on the rise, and the benchmark rate is already at 2.5%. Thus, if the US regulator announced a 0.75% rate hike the following month, the monthly forecast would become a reality. Indeed, the rate of 3.25-3.5% could have been priced in the current exchange rates in the stock market as well as that of the US dollar. However, FOMC members now suggest that the interest rate could exceed 3.5% and even be over 4%. This scenario seems more likely to unfold in the last six months of 2022.

Of course, a lot will depend on inflation. By the way, the July results will be published today. Should the figures drop by at least 0.50%, the possibility of a 0.75% rate hike will decrease. Overall, any significant fall in inflation would mean the interest rate could be raised by 0.5% in September. However, many experts, as well as the Fed, say inflation has not even peaked yet. In other words, consumer prices will continue to grow despite the fact that the interest rate is now closer to the neutral level. Meanwhile, Governor Bailey sees inflation in the United Kingdom at a rate of 13%. Yet, a few months ago, UK inflation was forecast to come in at 10%. So, inflation in the country is rising despite the aggressive Bank of England. Generally speaking, record inflation is a headache for the world's central banks in 2022, and it is likely to accelerate further in the next few months. In our view, the July report will hardly show a noticeable fall from June. This is exactly how inflation should react to tightening – to slow down gradually. Still, such a small drop can hardly be called significant. Therefore, we believe the Fed will raise the rate by another 0.75% in September and stick to the aggressive monetary approach.

Paolo Greco,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Stock Market on May 30th: S&P 500 and NASDAQ Resume Decline

At the close of the latest regular session, U.S. stock indices posted modest gains. The S&P 500 rose by 0.40%, the Nasdaq 100 added 0.39%, and the Dow Jones Industrial

Jakub Novak 10:45 2025-05-30 UTC+2

US Market: Court overturns trump tariffs

S&P 500 Market overview on 29.05 A federal court in the US has struck down all of former President Trump's trade tariffs. Major US indices on Wednesday: Dow -0.6%, NASDAQ

Jozef Kovach 12:53 2025-05-29 UTC+2

Stock Market on May 29th: S&P 500 and Nasdaq Pause Their Rally

At the close of the most recent regular trading session, U.S. stock indices posted modest losses. The S&P 500 declined by 0.56%, the Nasdaq 100 fell by 0.71%

Jakub Novak 11:04 2025-05-29 UTC+2

Navigating dollar surge and tech turmoil: key entry points for traders

Volatility has returned to financial markets. The dollar staged a sharp rally, driving down the yen, euro, and Swiss franc, but beneath the surface lies a web of unsettling signals

Аlena Ivannitskaya 11:44 2025-05-28 UTC+2

Update on US stock market on May 28

S&P500 US stock market is showing buoyant growth Snapshot of major US stock indices on Tuesday: Dow Jones: +1.8% NASDAQ: +2.5% S&P 500: +2.1% S&P 500 at 5,921

Jozef Kovach 10:38 2025-05-28 UTC+2

Stock Market on May 28th: S&P 500 and NASDAQ Continue Their Rapid Rally

Following the most recent regular session, U.S. stock indices closed with strong gains. The S&P 500 rose by 2.00%, while the Nasdaq 100 added 2.47%. The Dow Jones Industrial Average

Jakub Novak 09:43 2025-05-28 UTC+2

S&P 500 Forecast for May 28, 2025

The U.S. stock index, the S&P 500, has completed the correction that began on May 20. A sign of its completion is the price breakout above the inner boundary

Laurie Bailey 05:08 2025-05-28 UTC+2

Domestic Demand and Attractive Prices

The wave structure on the 24-hour chart for the #SPX instrument is generally easy to interpret. The global five-wave pattern doesn't even fit within the terminal window at the smallest

Chin Zhao 11:56 2025-05-27 UTC+2

Stock Market Update for May 27th: S&P 500 and NASDAQ Still Have Growth Potential

Following the most recent regular session, U.S. stock indices closed lower. The S&P 500 fell by 0.67%, while the Nasdaq 100 lost 1.00%. The industrial Dow Jones dropped by 0.61%

Jakub Novak 11:08 2025-05-27 UTC+2

Update on US stock market on May 27. Market picking up steam

S&P500 Snapshot of key US stock indices on Monday: Dow: -0%, NASDAQ: -0%, S&P 500: -0%, S&P 500 at 5802, with a trading range of 5400–6200. On Monday, US index

Jozef Kovach 10:40 2025-05-27 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.