Between a rock and a hard (landing) place!
Tonight at 6pm UK time we will get the results of the most difficult and closely watched Federal Reserve interest rate decision in living memory.
Why is this the case?
Prior to the recent turmoil in banking markets, investors were expecting another 0.5% interest rate rise from the Fed to 5.25% from the current rate of 4.75%.
Seeing as it was increasing rates that led to the something breaking in the banking system investors now expect a rise to continue to fight inflation but only 0.25% to 5%.
The unusual thing about this interest rate decision is that one can make sensible arguments for everything from a 0.5% rise to rate cuts!
We cannot remember a policy decision where investor opinion is so split.
Prior to the announcement equities have recovered a lot of lost ground following SVB & Credit Suisse. Part of this rally is based on the prospect for looser financial conditions looking forward. A 0.5% rate increase would dash these hopes in the short term.
All eyes to 6pm and the market reaction.
Opinions constitute our judgement as of this date and are subject to change without warning. With investing, your capital is at risk.