In the early hours of tomorrow morning (AEST) the US Federal Reserve federal open market committee (FOMC) will announce its June monetary policy decision.
Here’s the state of play.
- The FOMC has not increased interest rates since June 2006.
- It’s highly unlikely that this will change tomorrow morning with markets and economists leaning towards the first rate occurring at the FOMC’s September 16-17 meeting.
- When the FOMC last met in late April committee members noted that “economic growth slowed during the winter months, in part reflecting transitory factors”. In light of recent improvements in US economic data, particularly the labour market, it’s likely this assessment will be upgraded in the June monetary policy statement.
- At the conclusion of the meeting the FOMC will release updated economic forecasts and revised committee projections for the expected path for interest rates (those released in March are shown in the tables to the right).
- The latter, known as “the dots”, is closely watched by market participants and has the potential to create significant movements across financial markets. A downward revision to the expected pathway for interest rates may result in the US dollar weakening, and support US treasuries, despite the prospect for tighter monetary conditions.
- Each dot on the chart represents where individual FOMC members believe interest rates will sit at the end of each calendar year.
- Fed Chair Janet Yellen will also address the media 30 minutes after the monetary policy decision is announced. This may provide further clarity, if not already provided by the statement and economic projections, on the likely timing of when interest rates will rise.
Business Insider will have full coverage from 4.00am (AEST) Thursday morning.