This is CNBC’s live blog covering the Federal Open Market Committee meeting and Chair Jerome Powell’s press conference.
The Federal Reserve is widely expected to keep a steady hand on its overnight lending rate when it announces its policy decision on Wednesday at 2 p.m. ET, maintaining a target range of 3.5% to 3.75%.
The policymakers’ move comes at a key time for investors: Oil prices have been surging amid the Iran war, with Brent futures topping $109 a barrel at one point Wednesday. The producer price index report for February also came in hot, leading futures markets to sharply curtail the outlook for rate cuts this year. Fed funds futures trading now suggests there won’t be any realistic shot at a cut until at least December, according to CME Group’s FedWatch tool.
Traders will also keep an ear on Fed Chair Jerome Powell‘s press conference at 2:30 p.m., searching for hints on what might be next for policy, particularly as inflation fears are swirling.
Where markets stand as the rate decision approaches
The three major averages were lower around 1:40 p.m. ET, as the Fed’s interest rate announcement approached.
The S&P 500 was down 0.7%, and the Nasdaq Composite was off about 0.7%. The Dow Industrials were last lower by roughly 450 points, or nearly 1%.
The 10-year Treasury note yield inched higher by 2 basis points to 4.23%, while the rate on the 2-year note added nearly 4 basis points, trading at 3.714%.
—Darla Mercado
Traders dial back expectations for the next Fed rate cut
Inflation worries are spiking, thanks to a hot wholesale inflation reading on Wednesday, and that’s spurring traders to consider the likelihood that the Fed may not be cutting rates until much later this year.
The producer price index reading for February came in at 0.7%, surpassing the Dow Jones consensus of 0.3%. At the same time, oil prices have been on a runaway surge, with Brent crude futures up nearly 50% since the start of the Iran War.
Fed funds futures trading is now looking at a less than 60% likelihood that the central bank will ease up on policy in December, according to the CME FedWatch tool.
Read more from CNBC’s Jeff Cox on the market’s changing outlook for rate cuts.
—Darla Mercado
What to expect from the Fed’s interest rate decision due Wednesday
Central bank policymakers are expected to keep their key interest rate on hold at their target range of 3.5% to 3.75% at the conclusion of their March meeting.
Federal Reserve policymakers will be issuing their quarterly updates to economic and rate projections this time, as well.
The real event, however, will be what Fed Chair Powell will say at the press conference slated for 2:30 p.m. The economic picture has changed since the central bank leader last took the podium in January: Oil prices have been surging amid the Iran war, and the latest inflation reading – the producer price index for February – was hotter than anticipated.
Traders will look for clues on what could be next for policy with these new factors in play.
Read more from CNBC’s Jeff Cox on what to expect from the Fed’s decision here.
—Darla Mercado
