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Federal Reserve statement on interest rates, December 2018

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The Federal Reserve is set to release its most anticipated interest-rate decision in recent memory at 2 p.m. ET.

The Fed’s forthcoming messaging will set the tone for how it will handle an expected slowdown in growth next year, unprecedented political pressure from President Donald Trump, and investors who are nervous about the gradual removal of easy monetary policy.

Traders expect that the central bank’s Federal Open Market Committee raised the fed funds rate by 25 basis points to a range of 2.25% to 2.5%. This would lift the benchmark interest rate to its highest level since early 2008, when the Fed was cutting rates amid the Great Recession.

Americans with credit cards and other short-term loans will shortly notice the increase, but banks typically take longer to raise interest rates for savers.

Wednesday’s expected rate hike would come amid pushback from investors and President Donald Trump, who is concerned that higher borrowing costs will slow the economy. After repeated calls for the Fed to slow rate hikes, Trump tweeted Tuesday, at the start of the two-day policy meeting, that the Fed should “feel the market” and not pay attention to “meaningless numbers.”

The stakes are higher for the Fed not just because Trump is on its tail, but amid signs that the US economy is slowing down. Since the Fed last raised rates in September, the housing market has continued to weaken and business investment has softened. Also, the forward-looking stock market has slumped by more than 10% from recent highs into a correction, and rates traders have priced in a slower path of rate hikes for the Fed.

That’s why the Fed’s signals about monetary policy in 2019 will be all-important Wednesday, starting with the press release.

Read more: We interviewed Wall Street’s 8 top-performing investors to get their best ideas for 2019

“We think the key change in the policy statement will come from the removal of the forward guidance language for ‘further gradual increases’ in the fed funds target and the addition of language emphasizing data dependence,” said Michelle Meyer, the chief US economist at Bank of America Merrill Lynch, in a preview.

She said that in 2006, the Fed under Ben Bernanke dropped the word “measured” in the describing future rate hikes to signal the end of predictable decisions.

Fed Chairman Jerome Powell will have the opportunity to unpack any wording changes during his press conference at 2:30 p.m. ET. Starting in January, he will hold press conferences after every meeting and not just once a quarter — a development that some economists expect will introduce more market volatility because the Fed will become more unpredictable.

But investors will be able to glean the Fed’s thinking about next year and 2020 from its dot plot, which will be updated with new projections of where FOMC members see interest rates.

“This currently points to three rate hikes next year and, in our view, markets will be disappointed if the median dot doesn’t fail to indicate fewer rate increases,” said Mark Haefele, the chief investment officer of UBS Global Wealth Management, in a note.

Read more: Goldman Sachs unveils its best trade to profit from an unexpected move from the Fed in 2019

The Fed could also cut its forecasts for inflation, following the 34% plunge in oil prices since late-September.

In all, the Fed is poised to walk a tightrope as it approaches the end of this expansion and of the accommodative monetary policy that juiced the economy. According to Meyer, sounding too optimistic could further tighten financial conditions and hurt the economy. But if the Fed’s too dovish, the interpretation could be that the economy is on the rocks.

“Delivering a hike but with a clear message that subsequent hikes will be purely data dependent will be the best approach,” Meyer said.

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