Global markets await the Federal Reserve's meeting minutes later today to get a clearer view of the future of US interest rate cuts this year.
At its last meeting of 2023, the Fed announced the end of policy tightening and the start of discussions on interest rate cuts in 2024.
The Fed hinted at deeper interest rate cuts than expected in 2024 as inflation slows down.
Thus the markets now expect 150 basis points of total interest rate cuts by the Fed this year, compared to 75 basis points in official Fed forecasts.
Thus the dollar and US treasury yields suffered heavy losses in December, plumbing five-month lows.
The minutes will include important clues on the future path of interest rates and US policies in 2024.
Meeting Decisions
The Federal Reserve voted last month to maintain interest rates at below 5.5%, already the highest since 2001.
The Fed said in its official statement that economic activities slowed down after strong growth in the third quarter, with the labor sector moderating a bit, while unemployment remains lower.
The Fed believes inflation to still remain high, adding it'll continue to monitor data and conditions to gauge the appropriate policy response.
Fed Chair Jerome Powell clearly said the Fed is close to ending the current cycle of policy tightening, but he left all options open.
US Rates
Markets are now pricing in a 77% chance of a 0.25% interest rate cut by the Federal Reserve at the March meeting, with a 98% chance of such a cut in May.
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