Today’s FOMC Statement Will Potentially Determine Market Direction
Introduction
Today's FOMC statement and press conference will affect financial markets, with its tone being of particular importance. The market wants to know how long rates will be at elevated levels.
The current target range is 525-550 and the probability is that the Fed leaves this as is. However, today's announcement will include the dot-plot which will give the market extra information to digest.
The Dot-Plot
Source: Federeal Reserve Summary of Economic Projections, June 2023
The June median dot-plot suggested that there will be one more rate hike for 2023, with cuts into 2024.
If there are substantial changes to the dot-plot, the market is likely to respond. For example, today's dot-plot may show that rate cuts may be pushed further out, which will strengthen the "higher-for-longer" message. This will likely create a headwind for risk markets. However, if the Fed chooses to keep interest rates as they are, stick with their current outlook, and keep the 2024 median projection at 4.625%, the market is unlikely to show a big reaction.
On the other hand, the June dot-plot predicted one more interest rate hike by year-end, with a median projection of 5.625%. However, if today's projection decreases to 5.375%, it would signal that policymakers have finished raising rates, potentially leading to a substantial market rally.
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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