San Francisco Frontiers - US Fed kicks off rate meeting with another pause expected

The meeting began at 10:30 am (1530 GMT), the Fed announced in a statement.

With another pause almost certain, traders and analysts are keenly debating how soon the US central bank will start cutting interest rates, and how rapidly it will then do so.

The Fed, which has a dual mandate to lower inflation to its long-term target of two percent while also tackling unemployment, has continued to keep the threat of another rate hike alive.

"It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease," Fed Chair Jerome Powell said recently.

The Fed's threat of another hike is at odds with other central banks like the European Central Bank (ECB), whose policymakers have voiced growing support for an end to rate hikes amid a steep decline in inflation.

The ECB, Bank of England and other central banks will all publish their interest rate decisions this week.

These announcements will either fuel the recent buoyancy in stock markets on both sides of the Atlantic, or puncture the expectations that the Fed, and other central banks, are likely to begin cutting interest rates soon.

Fresh inflation data published Tuesday showed that consumer inflation in the United States edged down for a second straight month in November, providing some positive news for policymakers going into the meeting.

But underlying inflation, excluding volatile food and energy components stalled last month, underscoring the ongoing challenge facing the Fed.

Futures traders have assigned a probability of more than 98 percent that the Fed will sit tight at its next rate decision this week, according to data from CME Group.

F.Edwards--SFF