Market Reaction to Fed Could Depend on Dissents

Dow Jones05:28

Investors are fairly confident that the Federal Reserve will keep interest rates unchanged on Wednesday.

Interest-rate futures showed late Tuesday that traders see a 31.5% chance that the Fed raises rates versus a 68.5% chance that it stays on hold, according to CME Group data.

Analysts have predicted that the market's initial reaction to the Fed's decision could depend on how many dissenting votes there are if the central bank keeps rates steady.

Cleveland Fed President Beth Hammack and Dallas Fed President Lorie Logan are widely expected to vote in favor of raising rates. But stocks and bonds could react negatively if any other officials join them, seeing that as a sign that the central bank is moving closer to a rate hike.

Investors will also pay close attention to Fed Chairman Kevin Warsh's post-meeting press conference, although the new Fed leader has been at pains to say little about the direction of rates.

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