Wednesday preview: FOMC to keep interest rates unchanged, analysts predict

The Federal Reserve is expected to announce it will keep interest rates unchanged on Wednesday amid concerns about China’s flagging economy and a plunge in oil prices.

The US central bank is likely to say it will hold interest rates at 0.50% following its two-day policy meeting, according to the consensus forecast.

While no surprises are expected, the focus will be on the press statement released alongside the policy announcement for any clues on when the Fed will next raise interest rates.

Last month the Fed decided to lift interest rates by 25 basis points as the labour market improved and the economy recovered. It marked the first rate hike in nearly a decade.

However, the Fed may hold back from further tightening this month amid worries about risks stemming from a slowdown in emerging markets and low inflation due to the slide in oil prices.

“Investors will be keen to know whether the rate expectations have changed in response to the China-driven turmoil in the markets so far this year, or the renewed decline in commodities, both of which could add further deflationary pressures to an already low inflation environment,” said Craig Erlam, senior market analyst at Oanda.

“Markets tend to be extremely sensitive to the slightest change in language from the Fed which is why we can often see more caution in the lead up to the release.”

The Federal Open Market Committee releases its rate decision at 1900 GMT.

Wednesday 27 January

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
FOMC Interest Rate (US) (19:00)
GFK Consumer Confidence (GER) (07:00)
MBA Mortgage Applications (US) (12:00)
New Homes Sales (US) (15:00)

Q3
Wizz Air Holdings

FINALS
Ediston Property Investment Company, Staffline Group

EGMS
Fondul Proprietatea S.A. GDR (Reg S), Societatea Nationala De Gaze Naturale Romgaz S.A. GDR (Reg S)

AGMS
Alternative Networks, Britvic, Henderson Alternative Strategies Trust , Invesco Perpetual Enhanced Income Limited, John Lewis of Hungerford, JPMorgan Indian Investment Trust, Octopus VCT 3, Octopus VCT 4, Patisserie Holdings , Polar Capital Global Healthcare Growth & Income Trust, Renew Holdings, WH Smith

TRADING ANNOUNCEMENTS
Aberdeen Asset Management, Antofagasta, Britvic, Ebiquity

UK ECONOMIC ANNOUNCEMENTS
BBA Mortgage Lending Figures (09:30)

FINAL DIVIDEND PAYMENT DATE
Diploma, Majedie Investments