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The
U.S. Federal Reserve is seen hiking the Fed funds rate by 25
basis points (bps) at the end of its two-day policy meeting on
Wednesday, close on the heels of data showing signs of slowing
demand and cooling inflation.
"The interest rate snowball is gathering speed, and its
squashing down demand in its path," Susannah Streeter, markets
analyst at Hargreaves Lansdown wrote in a client note.
"Although rate rises are causing the U.S. economy to slip up,
hopes have come in flurries that it will still have a soft
landing. But there is nervousness ahead of the crucial Fed
meeting this week."
This will likely be the smallest rate increase since the Fed
kicked off its tightening cycle 10 months ago with a 25 bps
hike, with financial markets pricing in a final rate hike in
March.
Money markets now see rates peaking at 4.9% in June, still below
the 5% level expected by Fed policymakers. [FEDWATCH]
Heavyweight growth stocks, including Apple Inc, Amazon.com Inc
and Alphabet Inc, fell about 1.5% each in premarket trading.
They will report quarterly earnings on Thursday, after the bell.
The tech-heavy Nasdaq index notched its fourth straight weekly
gain on Friday.
At 6:25 a.m. ET, Dow e-minis were down 242 points, or 0.71%, S&P
500 e-minis were down 40.25 points, or 0.99%, and Nasdaq 100
e-minis were down 164 points, or 1.34%.
Other major central banks including the European Central Bank
and the Bank of England are also seen raising interest rates
later in the week.
(Reporting by Shreyashi Sanyal and Johann M Cherian in Bengaluru;
Editing by Vinay Dwivedi)
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