The first thing investors should know about the Federal Reserve’s last interest rate-setting meeting of 2019 in the week ahead is that nothing will change.
The second thing investors should know is how little change is expected from the Fed in 2020.
Finally, what investors know for certain is to plan on the unpredictable.
The stock market doesn’t do surprises well. That’s among the reasons why Federal Reserve officials tend to talk about their plans before they implement them. Just last month, Chairman Jerome Powell said the agency sees “the current stance of monetary policy as likely to remain appropriate” as long as there are no surprises. The statement is as clear of a signal investors will get that the Fed is comfortable after cutting its short-term target interest rate three times this year. The most recent reduction was in late October.
A Bloomberg survey of 31 economists finds none of them think the Fed will resume cutting interest rates in 2020, or in 2021 either. Nor do they think the Fed will have to raise rates over the next two years.
After its two-day meeting ends on Wednesday, the central bank will update its quarterly economic projections. Those predictions on inflation and the job market will help anchor market expectations for what the Federal Reserve may do with its key interest rate in the year ahead — and beyond.
A steady Fed may quiet any recession concerns and help underpin the stock market rally, but it won’t appease a president who is running for re-election and willing to disparage it, or the uncertainty surrounding global trade tensions.