Interest Rates to Stay Put….but Not for Long

With the U.S. Economy on solid ground, the Federal Reserve is expected to hold interest rates steady in the near-term, but will likely signal that more rate hikes are on the horizon.

According to the CME Group Fed Watch tool, investors are clocking in a rate hike for May’s meeting at 4.8% & June near 70%.

A quarter percentage point was introduced last December, followed by another economy tightening hike in March. Since the last Fed meeting the economy grew at a mere .7%, and March job growth stalled. While Q2 GDP is expected to rebound, and the unemployment rate is touching near-decade lows at 4.5%, among other economic data, the Fed has two additional employment reports to digest before its next meeting. Additionally, the Fed is unlikely to take any action until it can gain a clear picture on the Trump Administration’s tax policy & what can reasonably get passed by law makers in Washington.

While tomorrow’s announcement should come at no surprise, trading during large economic events, such as a FOMC announcement, tend to trigger increased market volatility. Thus, it’s vital to approach the markets with sound risk/reward measures coupled with protective stops.

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