The US central bank will begin a two-day monetary policy meeting on Tuesday. At its end should come Wednesday’s decision to raise the base interest rate by 0.75 percentage points. But investors are uncertain whether that will actually happen.
U.S. Central Bank Meeting
The US dollar is in its third session in a row, during which it has weakened against a basket of foreign currencies. On Monday, the dollar index wrote down 0.16 percent, against the euro the dollar lost just 0.05 percent. The most significant factor in the weakening of the dollar is the US central bank’s two-day monetary policy meeting, which takes place on Tuesday and Wednesday.
High inflation and the oncoming recession
There is escalating nervousness among investors about concerns about whether the Federal Reserve will actually raise its base interest rate by 0.75 percentage points, as is widely expected. Inflation in the US, while showing signs of stabilizing, still remains at its highest level since the early 1980s. On the other hand, there are signs of an oncoming economic recession that could hamper the Fed’s efforts to radically reduce inflation. So Tuesday and Wednesday can be seen as a certain test of the unity of Fed members who make interest rate decisions.