The US stock exchange opened higher Wednesday morning before a highly-anticipated Federal Open Market Committee (FOMC) meeting and press conference from Federal Reserve chairwoman Janet Yellen.
Wednesday, December 17, 2014
However, the gains are tenuous at best, as the market remains volatile behind slipping oil prices and Russian economic moves. The S&P 500, Dow and Nasdaq all gained 0.2% this morning.
The FOMC will release its policy statement and new economic projections at 2 PM today, Bloomberg reported. Janet Yellen will conduct a press conference at 2:30 PM. Most economists believe the Fed will stand by its position to keep interest rates low, but may drop the phrase ‘considerable time’ – language it’s used in past policy statements.
“There’s some pivoting over the ‘considerable time’ phrase,” Michael Ingram, a market strategist at BGC Brokers LP in London, told Bloomberg. “It won’t be replaced with nothing. There’s some feeling that they’ll keep some of that language in there, and the futures are seeing some support from that. It is also a bounce because the U.S. has been down a bit harder in the last couple of days.”
Factors that will shape the Fed’s decision
There are several underlying influences that will likely impact the Fed’s policy statement, according to The Wall Street Journal. The FOMC will examine these points in order to determine whether US economic recovery is strong enough to warrant an interest rate increase.
The Fed will study the labor market after an unexpectedly strong month for employment in November. If they feel that is a sign of a more robust jobs market that would boost inflation toward its 2% target, then that would bode well for the US growth forecast.
Oil prices have been a thorn in the side of analysts attempting to predict economist growth. At around $60 a barrel, oil has fallen over 40% since June and there is no sign of a bottom. The price decline is not necessarily a bad thing for US growth, though – the Fed’s predictions for growth, inflation and unemployment will reveal whether or not they believe low oil prices are a boon for the economy.
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