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Mohamed A. El-Erian

What the Fed Will Signal Next Week

There won’t be a rate hike, but the bank could tweak its hints to markets.

Powell will keep it low-key.

Powell will keep it low-key.

Photographer: Erica Canepa/Bloomberg

The Federal Reserve is highly unlikely to raise rates at its policy meeting next week. The view that the event will be a snoozer, with little potential to move markets significantly, is reinforced in two ways: the semi-annual report to Congress on monetary policy by Chair Jerome Powell last week that involved comprehensive written submissions and hours of Q&A; and because the meeting on July 31 and Aug. 1 will not be accompanied by a news conference or the release of new economic and policy projections (including the “blue dots”).

Yet this sense of quiet may be too partial. Central bank officials face a series of delicate internal judgment calls about the economy and the path of both interest rates and balance-sheet policies. They must decide whether to tweak their prior market signals on four issues in particular.