Awaiting the Fed's decision. What will the week bring?

The end of the last week and the beginning of the current one are marked by very optimistic moods on the markets. The S&P500 index was near this year's highs, as was the technological Nasdaq100. The fuel for growth is the hopes of investors related to the development of artificial intelligence, which after cryptocurrencies and the metaverse has become the number one market topic. But this week, all eyes will be on Federal Reserve, which will again decide on the level of interest rates in the United States.

Rate hike only in July?

The June meeting of the Fed should not bring any change in the shape of the American monetary policy - the market is pricing in Wednesday's hike at only 7 bp. It is definitely more likely that the Reserve will raise the level of interest rates in July, but the market predicts that they will start to be lowered already at the turn of the year. Will it really be like that?

Jerome Powell and individual FOMC members have so far been extremely clear about their intentions - as long as inflation in the United States is above target, the Fed will tighten its monetary policy. In recent months, the dynamics of price growth has started to decrease markedly. The latest CPI inflation report in the US will be released on Tuesday, at 14:30.

Positive market sentiment also supports the Polish currency. The zloty continues to grow against both the euro and the recently slightly weaker dollar. The optimism towards PLN is also reflected on the Warsaw Stock Exchange, where the WIG20 creates new, this year's highs. Nevertheless, the EURPLN valuation is clearly below the inflation-adjusted fundamental rate. Will gold begin to weaken?

In today's webinar:

• Heavily mixed data from the global economy
• Why such good market sentiment?
• Fed wants pause - but will the data allow?

About the host

Dr Przemysław Kwiecień - Chief economist X-Trade Brokers. Doctor of Economics at the University of Warsaw, graduate of the University of Warsaw and London Metropolitan University (MSc). Holder of the prestigious CFA certificate. He has been working for XTB since 2007, previously he gained experience as an advisor to the Minister of Finance, Mirosław Gronicki, and an economist at Bank Millennium. At XTB, he manages the Analysis Department.

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