Fed’s Rate Hike Decision Is Almost Here

Monetary policy will be in the spotlight this week as Federal Reserve policymakers gather for the latest FOMC meeting on Tuesday, with an interest rate decision expected Wednesday. The Bank of England (BoE) will hold its own policy meeting on Thursday. We’ll also get the latest updates on the housing market, including building permits, housing starts, and existing home sales for August, and the NAHB’s Housing Market Index for September. FedEx, AutoZone, and General Mills will report earnings this week.

Week of Sept. 18: 

Monday, September 18

  • NAHB Housing Market Index (Sep)

Tuesday, September 19

  • AutoZone (AZO), Endava PLC (DAVA), and Apogee Enterprises Inc. (APOG) report earnings
  • Building Permits (Aug)
  • Housing Starts (Aug)
  • Day 1 of FOMC Meeting

Wednesday, September 20

  • FedEx Corp. (FDX), General Mills (GIS), and KB Home (KBH) report earnings
  • Day 2 of FOMC Meeting; Interest Rate Decision and Press Conference
  • U.K. Inflation Rate (Aug)

Thursday, September 21

  • Darden Restaurants (DRI) and FactSet Research Systems Inc. (FDS) report earnings
  • U.S. Current Account (Q2 2023)
  • Philadelphia Fed Manufacturing Index (Sep)
  • CB Leading Economic Index (Aug)
  • Existing Home Sales (Aug)
  • Japan Inflation Rate (Aug)
  • Bank of England (BoE) Interest Rate Decision

Friday, September 22

  • S&P Global Composite PMI – Flash Estimate (Sep)

Central Banks Decide on Interest Rates 

Federal Reserve officials will gather for the two-day meeting of the Federal Open Market Committee (FOMC) on Tuesday, with an interest rate decision and press conference featuring Chair Jerome Powell expected on Wednesday.1

Fed policymakers are widely expected to hold interest rates steady, according to fed funds futures published by CME Group, with a possibility of one more rate hike by the end of the year, depending on the trajectory of inflation.2 The Fed will likely hold its benchmark federal funds rate above 5% through at least summer next year as it seeks to bring down inflation closer to its 2% target.

On Thursday, Bank of England (BoE) policymakers will also meet to decide on interest rate policy.3 They're expected to hike their benchmark rate by 25 basis points to 5.5%—the highest since 2008, according to economists surveyed by Reuters.4 This would mark the 15th consecutive rate hike since the central bank started raising rates in December 2021, in an effort to combat the fastest U.K. inflation in decades.

Housing Market Updates 

We’ll get the latest updates on the housing market this week, including building permits, housing starts, and existing home sales for August, and the NAHB’s Housing Market Index for September.5 Housing starts, a proxy for home construction, are projected to have fallen to 1.44 million units in August, down from 1.45 million in July. Existing home sales are projected at 4.1 million, up slightly from 4.07 million in July.6

The NAHB’s Housing Market Index, which tracks homebuilders’ future sales expectations, likely rebounded to 53 this month after it fell 6 percentage points in August. That’s down from a pandemic-era peak of 84 in 2021, before the Fed’s interest rates hikes contributed to a sharp rise in mortgage rates and lower demand, but above a low of 31 in December last year.

Originally published on Investopedia.com