Fed Meeting Preview: What You Need to Know About FOMC September 2022

The Federal Open Market Committee (FOMC) meets eight times per year (sometimes more depending on the state of the economy) to set the Federal Funds Rate – a key benchmark for interest rates in the US – and speculate on future monetary policy. Since Fed Meetings tend to shift stock, bond, and forex markets, traders and investors alike can prepare for the event with notes from the last Fed Meeting and projections for the coming meeting. The Fed Meeting scheduled for September 2022 will occur on September 21, 2022, including the interest rate decision at 2:00 PM EST and press conference at 2:30 PM EST.

What Happened at the Last Fed Meeting?

The FOMC raised interest rates by 0.75% to a total of 2.38% at the July 2022 Fed Meeting.* The Committee cited goals of maximum employment and 2% inflation as drivers for raising rates, the latter of which is 8.3%.† The Fed has steadily hiked interest rates in recent meetings to help curb rising inflation – high interest rates theoretically disincentivize spending and reduce prices for goods and services.

What Will Happen at the September 2022 Fed Meeting?

The Fed is expected to hike again at September’s given projections from the CME’s Fed Funds Futures,** but one question remains: how much? Going into Wednesday’s Fed Meeting the most probable outcome is a 0.75% hike, though there is a an approximately 18% chance of a full 1.00% hike.

Fed Meeting Interest Rate Projections for September 21, 2022

How Do Fed Meetings Affect Markets?

Rising interest rates can be negatively correlated to stocks, theoretically, as higher interest rates make borrowing money and thus growth more expensive for companies. Alternatively, the Fed hiking rates can show economic strength in the US, relatively speaking, which can cause US dollars to appreciate against other currencies such as the euro, British pound, and Japanese yen.
All of that said, these two trends have already played out to a significant degree. The Fed hiking 0.75% or less could cause a reversal of such trends while a hike of 1.00% or greater could influence their expansion.

*July 27, 2022, Federal Reserve Press Release (Source: https://www.federalreserve.gov/monetarypolicy/files/monetary20220727a1.pdf)
†September 13, 2022, Bureau of Labor Statistics News Release (Source: https://www.bls.gov/news.release/pdf/cpi.pdf)
**September 21, 2022, Target Rate Probabilities as of 9/19/22 (Source: https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html)