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The policy-setting Federal Open Market Committee kicked off its September meeting yesterday, with expectations to deal a third-straight 75-basis-point increase to its benchmark interest rate.
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The readout of Federal Reserve expectations will determine whether markets get relief from a recent sell-off or extend sharp declines. Last Friday, all three major averages logged their worst week since June. Hotter-than-expected inflation data earlier this month sparked a new wave of pessimism about the US central bank’s rate-hiking campaign and its potential to significantly stunt economic growth.
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Goldman Sachs (GS, $323.26) warned on Thursday that the stock market may plunge another 26% if the Fed’s rate-hiking campaign triggers a recession.
Why it matters
Investors are waiting keenly for the speech by Fed Chair Jerome Powell to gauge clues around any further hikes in the future. So far, hotter-than-expected inflation data earlier this month triggered concerns on the US central bank’s interest rates and the Consumer Price Index (CPI) in August, reflecting an 8.3% increase over last year and a 0.1% increase over the prior month.
