CNBC reports that the Fed is not expected to take any action on its benchmark fed funds rate this week, but it is likely to reassure markets that it is watching the outbreak of the coronavirus and other geopolitical uncertainties.
Fed Chairman Powell is slated to brief the press after the Fed releases its statement Wednesday afternoon, and it is in those comments investors will likely get the most insight into the Fed's thinking.
"They might say something about paying attention to global developments, but I wouldn't expect them to do anything at this point," said Ed Keon, chief investment strategist at QMA. Strategists expect the Fed has been watching tensions in the Middle East and now the coronavirus.
"They're looking at the global economy and it doesn't look like it will have much affect at the moment," he said.
On the policy side, the Fed is expected to hold rates steady and not signal any other moves.
"I think the Fed will be silent," said Joseph Quinlan, head of CIO market strategy at Merrill and Bank of America Private Bank. "They've come into 2020 with their work done. This is a political year. They've done their job when it comes to cutting rates. I think they're in wait-and-see mode."
BlackRock's Rick Rieder said he will be listening for how the Fed describes inflation since it has said it is willing to let it run "hotter" than its 2% target, though the measure it watches has not yet met the target. He, too, is looking for clarification on the Fed's plans for its T-bill buying program. He expects the Fed to discuss it by mid-second quarter.
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