The US Fed decision; here’s what to expect

The most important cue for the market at least over the next 48 hours or so the much anticipated Fed decision is lined up. This has been a topic this year which has been discussed as much as what the fed is likely to do in the March meeting.

Markets expect that the FOMC will raise the funds rate target range by 25 basis points. The case for a 25 basis points hike is pretty straightforward.

Two weeks ago in a congressional testimony Fed Chair Powell indicated that he would "propose and support" a quarter-point hike. This comment was made after the Russians were already in Ukraine.

Also consider that fact that since the FOMC's January meeting, most other fed members, have also said that it would be appropriate to hike rates in the March meeting so a 25 basis points hike seems very likely.

The Powell press conference will be closely watched by investors. Apart from Powell's assessment of pressures from the recent spike in energy and commodity prices, this is perhaps the place where we will get to hear the Fed’s thinking on the reducing the size of the Fed balance sheet, such as the size of the monthly runoff caps and the conditions that will warrant the eventual start of the process.