The Federal Open Market Committee (FOMC) is likely to meet on March 21-22, 2023. The FOMC holds eight regularly scheduled meetings during the year and other meetings as needed.
In a recent speech, Federal Reserve Chairman Jerome Powell cautioned that interest rates are likely to rise more than initially anticipated. As a result, the markets are once again anticipating a 50 basis point rate increase at the next Fed meeting.
The late-Friday release of US jobs data is especially critical since it could have an impact on the Federal Reserve’s rate decision at its forthcoming meeting. Thus, it is anticipated that market volatility will persist in the foreseeable future.
How it impacts rate hike?
Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services.
The Federal Reserve controls the three tools of monetary policy–open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations. Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.
