The much-anticipated Federal Funds Rate announcement from the FOMC is now only 30 minutes away and the market is poised to see where they are going to land after the last couple of weeks turmoil in the banking sector. Less than two weeks ago we were firmly expecting another 50-bps rate hike as strong US data and inflationary pressures led to predominately hawkish FOMC, however bank failures both in the US and in Europe have led to a drastic turn around in expectation. There are good arguments for three different outcomes and that is what is making this such a key event for investors, no change, 25bps hike and 50bps hikes have all been debated over the last couple of weeks and the market now has firmly priced in the middle ground option. Expect sharp and violent moves in the market is we see anything other than 25bps, but the most likely catalyst for a market reaction will come from the statement and press conference as Jerome Powell attempts to reassure a sensitive markets whilst still keeping a top on inflation.’
