Fate of the economy: The Federal Reserve will announce its monetary policy decision today and investors are anxiously anticipating the report.

The Federal Reserve will announce its monetary policy decision by 18:00 GMT, and Chairman Jerome Powell’s press conference will follow half an hour later.

We expect no changes to the rate of asset purchases or to key interest rates, so market (investors) attention will focus on the Fed’s guidance — specifically, on whether the ‘dot plot’ of Fed officials rate expectations shift to reflect an earlier tightening of policy than assumed hitherto.

The Fed’s current guidance implies no interest rate hikes until 2024, but the rise in bond yields in recent weeks has implied market expectations of an earlier move.

Also of note: the Fed will decide on whether or not to extend the current exemption of banks from the Supplementary Leverage Ratio (the amount of banks must hold relative to their total loan exposure) as a binding capital requirement, which is due to expire at the end of March.

If the exemption is not extended, banks may find themselves unable\ to make payouts to shareholders, and to absorb the huge volume of Treasury bonds being issued this year.

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