Investors wait for the fed interest decision

Investors around the world are eagerly waiting for the Federal Reserve to announce its interest rate decision later today, November 3, 2021. This follows the Federal Open Market Committee’s two-day meeting.

Euro stocks were largely flat as investors waited to learn the direction of the Fed. The FTSE 100 index was down -0.43%, DAX -0,07%, and the CAC 40 was up 0.31% by the time of writing.

Inflation in the U.S is currently high enough to make investors across the world not rule out a hint on a tight monetary policy to be implemented later next year. However, fed officials have been saying that this inflationary period is transitory; therefore, there is no need to act on the monetary policy rate.

There is an expectation that inflation might come down eventually, based on the fact that many consumers have almost depleted their savings since the pandemic has dragged for so long. This leaves them with less discretionary income that has fueled prices higher. More so, higher prices are expected to discourage consumers from keeping on consuming, which should take the pressure off prices.

The Fed is expected to provide more guidance on tapering as big economies around the world start to ease liquidity injections. Expectations are that the central bank will begin to announce that it will start to wind down its $120 billion in monthly bond purchases. The program is expected to be entirely ended by mid next year.

Even though markets are not entirely ruling out a hint at increasing rates, some analysts don’t expect any shock decisions. The current status quo could be maintained, but it remains to be seen whether this will last longer than the end of 2021.

U.S equities are expected to continue the rally. However, U.S index futures were all down at the time of writing, with the Dow Jones Industrial Average futures down -0.27% and the S&P 500 futures down -0.15%.