The Federal Reserve may be less likely to raise interest rates this week than futures markets suggest.
The central bank began its two day policy meeting Tuesday and will announce its decision at 2 p.m. Eastern Time on Wednesday. The benchmark rate has remained between 3.50% and 3.75% since December.
Markets were pricing roughly a one in three chance of a quarter point increase, with most traders still expecting policymakers to leave rates unchanged.
The decision marks the second meeting led by Fed Chair Kevin Warsh, who has emphasized the importance of returning inflation to the central bank’s 2% target but has offered little guidance about his preferred timing for higher rates.
A major obstacle to a July increase is that Fed policy shifts rarely consist of a single move. Once officials begin raising or cutting rates after an extended pause, they generally continue in the same direction over several meetings.
