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Gold Awaits Fed Decision As Markets Brace For Crucial Policy Signals
(MENAFN- Mid-East Info) By Daniela Hathorn, senior market analyst at Capital
Markets are treading cautiously on Wednesday as attention turns to the Federal Reserve decision due later in the day. The CME FedWatch tool shows the probability of a 25bps rate cut at around 90%, indicating strong market conviction that the central bank will continue easing policy-despite Powell's earlier attempts to temper expectations. Given how fully priced in this move is, the market reaction to a standard 25bps cut may be muted. Instead, the tone of the communication and the updated economic projections will be the real market drivers. A cut is a cut-but what matters now is why the Fed is cutting, and what Powell signals about the path ahead. A hawkish cut, where Powell emphasises concern about inflation's trajectory and pushes back against expectations of aggressive easing in 2026, would have a markedly different market impact than a dovish cut, where softening labour-market conditions dominate the narrative and further rate reductions remain on the table. The details will matter. Markets will look closely at where FOMC participants project the policy rate to be by December 2026, and whether those projections have shifted from September. The vote split will also be key-how many members dissent, and whether those dissenters argue for holding rates steady or for cutting more aggressively. Summary of Economic Projections from the September 2025 meeting -p decoding="async" class="CToWUd" title="A graph of stock marketAI-generated content may be incorrect." src="#" alt="A graph of stock marketAI-generated content may be incorrect." width="624" data-bit="iit" /> Past performance is not a reliable indicator of future results.
Markets are treading cautiously on Wednesday as attention turns to the Federal Reserve decision due later in the day. The CME FedWatch tool shows the probability of a 25bps rate cut at around 90%, indicating strong market conviction that the central bank will continue easing policy-despite Powell's earlier attempts to temper expectations. Given how fully priced in this move is, the market reaction to a standard 25bps cut may be muted. Instead, the tone of the communication and the updated economic projections will be the real market drivers. A cut is a cut-but what matters now is why the Fed is cutting, and what Powell signals about the path ahead. A hawkish cut, where Powell emphasises concern about inflation's trajectory and pushes back against expectations of aggressive easing in 2026, would have a markedly different market impact than a dovish cut, where softening labour-market conditions dominate the narrative and further rate reductions remain on the table. The details will matter. Markets will look closely at where FOMC participants project the policy rate to be by December 2026, and whether those projections have shifted from September. The vote split will also be key-how many members dissent, and whether those dissenters argue for holding rates steady or for cutting more aggressively. Summary of Economic Projections from the September 2025 meeting -p decoding="async" class="CToWUd" title="A graph of stock marketAI-generated content may be incorrect." src="#" alt="A graph of stock marketAI-generated content may be incorrect." width="624" data-bit="iit" /> Past performance is not a reliable indicator of future results.
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