On Thursday at 2:15 p.m. ET, the FOMC will issue its statement on policy for the Fed Funds rate. In fact, this two-day June meeting is one of the most widely anticipated meetings of the FOMC in quite a while.
At the crux of the decision is inflation. The Fed has made extremely clear that it believes that inflation is the biggest long-term threat to the U.S. economy. So much so, in fact, that they have raised the target Fed Funds rate (and thus overall interest rates) by at least 25 basis points (0.25 percent) in every single one of their last 16 meetings!
So will the trend continue?
Yes. Despite my plea to the contrary, Mr. Bernake will announce that the Fed has pushed the fed funds target rate up another 25 basis points and that they will continue to monitor economic data for signs of inflation, but that for right now, things seem under control and the economy fairly strong.
This move will likely not shock the stock market, which has already sold off over the last month or so in anticipation of further rate hikes and higher interest rates. In fact, if Mr. Bernake does mention something positive about our economy, stocks could soar quickly on a "relief rally."
I will be keeping a fairly neutral stance going into the announcement, but prepared to pounce on opportunities presented by the market's reaction to the news on Thursday.
Andy Swan is co-founder and head trader for DaytradeTeam.com. To get all of Andy's day trading, swing trading, and options trading alerts in real time, subscribe to a one-week, all-inclusive trial membership to DaytradeTeam by clicking here.