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The U.S. central bank is expected to raise its target fed funds rate on Wednesday for the first time since the onset of the pandemic. Analysts and economists are hyper-focused on this key event, as the Russia-Ukraine conflict continues in Europe. If the Federal Reserve decides to increase the rate by a quarter percentage point from zero, investors wonder how stock markets, crypto prices, and investments like precious metals will react to the news.<\/strong><\/p>\n Last week, the world watched as financial sanctions<\/a> were used<\/a> against Russia and the price of gold soared<\/a> to an all-time high reaching $2,060 per ounce. Energy stocks, oil, and a myriad of commodities also jumped considerably in value during the last seven days. Cryptocurrency markets last week were lackluster, volume is down, and action remained flat after a brief price jump on March 9, 2022.<\/p>\n Stocks on the other hand suffered a great deal and indexes like the NYSE, Dow Jones, S&P 500, and Nasdaq all closed the day in red on Friday afternoon (EST). Making matters worse, data<\/a> stemming from the U.S. Labor Department\u2019s Consumer Price Index (CPI) report shows consumer prices tapped a 40-year high at 7.9% in February.<\/p>\n A key event this week for all of the aforementioned markets will be on Wednesday. That\u2019s when the U.S. Federal Reserve is expected<\/a> to increase the benchmark bank rate for the first time since the Covid-19 pandemic. The increase is anticipated to be a mere quarter-point hike, but investors will also be wondering if the Fed reveals a series of rate hikes for the rest of the year.<\/p>\n During a panel discussion on March 11, Oxbow Advisors managing partner, Ted Oakley, said<\/a> he expects a 25 basis point increase this Wednesday.<\/p>\n \u201cI want to look at what we might see happen with the Fed. Obviously, next week, we\u2019re expecting a 25 basis point increase there,\u201d Oakley said. \u201cA lot of concern that we saw the markets still didn\u2019t seem to be that settled about what the Fed might do next. How do you plan around this? How do you position your portfolio when you\u2019re not really sure how aggressive the Fed will be?\u201d<\/p>\n CME\u2019s Fed Watch Tool<\/a> is also expecting the U.S. central bank to raise rates by 0.25 percentage points. A Bloomberg report<\/a> published on Sunday further details that after the first rate hike, the Fed could get more \u201caggressive.\u201d<\/p>\n \u201cFutures markets show around 165 basis points of tightening this year, or the equivalent of at least six quarter-point increases,\u201d Bloomberg\u2019s Craig Torres and Olivia Rockeman explain. At the House Financial Services Committee meeting on Tuesday, Moody\u2019s Analytics chief economist Mark Zandi said<\/a> he thinks it\u2019s a good idea to move forward normalizing rates. At the meeting, Zandi stated:<\/p>\n To ensure that the economy continues to expand and avoid recession, I do think that it\u2019s important to normalize interest rates.<\/p>\n<\/blockquote>\n On Sunday afternoon, the price of one ounce of gold is lower than the $2,060 high it saw last week. An ounce of gold is currently exchanging hands for $1,980 per ounce<\/a> of .999 fine gold. At the time of writing, the global crypto market capitalization is hovering around $1.78 trillion down 2.6% during the last 24-hours.<\/p>\n Crypto markets<\/a> remain lusterless with only a few tokens gathering single-digit gains on Sunday. Digital currency supporters will be watching the Fed\u2019s move on Wednesday to see if it affects crypto markets negatively. As far as most reports<\/a> are concerned, there\u2019s not much of a chance that the central bank won\u2019t raise its target fed funds rate this month.<\/p>\n Just like the futures markets and CME\u2019s Fed Watch Tool, most analysts and economists agree that Fed chair Jerome Powell\u2019s and the U.S. central bank\u2019s monetary easing tactics are coming to an end.<\/p>\n \u201c[Jerome] Powell can\u2019t really afford to be dovish at this point, it would be inconsistent with what sound policy is and where policy needs to be heading,\u201d Derek Tang, an economist at Monetary Policy Analytics in Washington said<\/a> on Sunday.<\/p>\nA 25 Basis Point Increase Is Expected \u2014 Anxiety Revolves Around the Fed\u2019s Next Moves<\/h2>\n
Fed Watch Tool Predicts 25 Basis Point Increase, Report Shows Futures Markets Predict an \u2018Aggressive\u2019 Series of Rate Hikes<\/h2>\n
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Crypto Markets Remain Lusterless, Gold Sheds 3.49%, Monetary Easing Tactics to End<\/h2>\n