The Federal Reserve is likely to keep its benchmark interest rate in a range of 4.25% to 4.50% when policymakers issue their policy decision at 2 p.m. ET on Wednesday.
This meeting could be heavy on Washington drama, however. Traders will be watching Fed governors Christopher Waller and Michelle Bowman to see if they dissent with policymakers’ move to keep the federal funds rate steady. Both Waller and Bowman have signaled their preference for a rate cut.
Traders will also watch Fed Chair Jerome Powell’s press conference at 2:30 p.m. ET, seeking hints on whether a September rate cut could be in the cards.
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Where markets stand prior to the Fed’s decision
The three major averages were in positive territory around 1:45 p.m. ET as the Federal Reserve’s rate decision loomed.
The S&P 500 was last up 0.3%, while the Nasdaq Composite was up 0.5%. The Dow Jones Industrial Average was toting a 50-point gain, or 0.1%.
The 10-year Treasury yield traded at 4.356%, up nearly 3 basis points. The rate on the 2-year Treasury was last up nearly 2 basis points at 3.893%.
—Darla Mercado
Where consumer rates stand since March 2022
Since the Federal Reserve started raising rates in March 2022, the news has generally been pretty good for savers and for investors who depend on attractive yields from fixed income assets.
As of the week of July 25, the annual percentage yield on a five-year certificate of deposit sat at 1.7%, up from 0.5% in March 2022, according to Haver. Yields on savings accounts are also currently higher: 0.38% as of July 21, versus the 0.06% paid in March 2022, per the Federal Deposit Insurance Corporation, or FDIC.
Rates haven’t been so great for borrowers, however, even as the Fed cut by a full point in 2024. The rate on a mortgage stood at 6.81% last week, compared to 4.29% in March 2022, according to Mortgage News Daily. Credit card annual percentage rates also remain high, standing at 20.13% as of a week ago, versus 16.34% in March 2022, according to Bankrate.
— Darla Mercado, Nick Wells
Fed is likely to stand pat on rates, but this meeting could be notable
The Federal Reserve will likely keep its benchmark rate at the target range of 4.25% to 4.50% — where it has been since December — but traders will want to look for decision dissenters this time around.
Just last month, Fed governors Christopher Waller and Michelle Bowman indicated their preference for a rate cut. If both signal their disagreement with holding steady on rates, it will be the first time multiple governors have dissented since 1993.
Further, the meeting takes place as tensions between Fed Chair Jerome Powell and President Donald Trump intensify. Trump has been pushing for the central bank to start lowering rates, though for now he seems to have backed away from his threats to fire the Fed chair.
Read more from CNBC’s Jeff Cox on what to expect from the Fed.
— Darla Mercado