When Is the Next Fed Meeting?

"When is the next Fed meeting?" is a question that hasn't weighed this heavily on anxious investors' minds in probably four decades. 

Which is fair enough, really. The worst inflation to hit the U.S. economy in 40 years appears to have peaked in 2022, and yet the Federal Reserve remains committed to its most aggressive campaign of interest rate hikes since the late Carter and early Reagan administrations.

After all, who can forget that rising interest rates sparked turmoil in the banking sector? Silicon Valley Bank and Signature Bank failed, Credit Suisse (CS (opens in new tab)) was forced into the arms of competitor UBS (UBS (opens in new tab)) and shares in First Republic Bank (FRC (opens in new tab)) went into freefall. 

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There's a saying on Wall Street that the Fed stops hiking rates when something breaks. The proximate cause for SVB's collapse was a classic bank run. But what spooked depositors in the first place was the fact that SVB had so much of its capital essentially trapped in Treasury bonds, the prices of which fall when interest rates rise. 

And surely no one can forget that the fastest pace of rate hikes in four decades absolutely clobbered equity markets in 2022. All three major indexes fell into bear markets amid rate increases, and they remain far from pulling out. 

Meanwhile, the economic data aren't helping the case for lower interest rates – even as rate increases put stress on the banking sector and threaten to push the economy into recession.

Although the March CPI report showed that headline inflation rose at the slowest annual pace in nearly two years, core inflation – which excludes volatile food and energy prices – picked up over the past 12 months. Experts say the "sticky" core inflation reading all but ensures another Fed rate hike in May.

And speaking of energy prices, members of OPEC+ in early April announced surprise cuts to their crude oil production targets. Oil futures predictably spiked on the news. While that's good news for investors in oil stocks, higher energy prices are inflationary in the shorter term, and potentially recessionary in the longer term.

Other data are likewise complicating the Fed's mission.

Heightened uncertainty among consumers caused U.S. retail sales to fall 1% in March vs the previous month. That marked the fourth time retail sales declined in the past five months.

And then there's the bigger picture: while gross domestic product or GDP grew by more than economists forecast in the fourth quarter, growth slowed sequentially from Q3. The GDP outlook for 2023 is unquestionably downbeat too, with some forecasters putting the probability of recession at 60% or greater. A separate survey of professional forecasters by the Federal Reserve Bank of Philadelphia (opens in new tab) projects real GDP growth of just 1.3% in 2023.

Most importantly, there's the labor market, which remains far too robust for the Fed's comfort. Although the March jobs report revealed the slowest pace of hiring in more than two years, the 236,000 increase in payrolls was still well above the 183,000 monthly average recorded between 2010 and 2019. Separately, the unemployment rate ticked down to 3.5% from 3.6%, a 50-year low. 

The March figures did, however, come in slightly below economists' average forecast, which relieved at least some pressure on the Federal Reserve. Don't forget that the February jobs report and the January jobs report blew away economists' and market participants' expectations.

The fact remains that despite a number of high-profile layoffs, primarily in the technology sector, the jobs outlook remains fairly robust. 

The bottom line? The Federal Reserve has made it plain and clear that it will continue to raise interest rates to try to slow the economy, increase unemployment and, by extension, cool inflation.

When you consider the Fed's dual mandate of promoting both "maximum" employment and stable prices against the backdrop of financial sector stress, stumbling share prices and rising recession odds, no wonder investors are obsessed with the question of "when is the next Fed meeting?"

The next Fed meeting: what to expect

For the record, the central bank's rate-setting committee is called the Federal Open Market Committee (FOMC).

As you can see from the FOMC meeting calendar (opens in new tab) below, the committee meets eight times a year. These meetings last two days, and conclude with the FOMC releasing its policy decision at 2 pm Eastern time. The Fed chief then holds a press conference at 2:30 pm. (Pro tip: as closely scrutinized as the Fed statement might be, market participants are usually even more keen on what the Fed chair has to say in the press conference.)

As for the next Fed meeting, it begins on May 2 and will end with a policy statement on May 3 at 2 pm Eastern.

As of April 21, interest rate traders assigned an 86% (opens in new tab) probability to the FOMC raising the short-term federal funds rate by another quarter of a percentage point, to a range of 5.0% to 5.25%. By the same token, traders bet there was a 14% chance of the Fed leaving interest rates unchanged.

Should another 25 basis point increase come to pass, that would represent a continuation of policy from the Fed's March rate hike of 0.25%, which itself was a continuation of policy from the February meeting. 

To recap: in February, the FOMC raised rates by 25 basis points, which was the second step in easing following its December meeting. 

In December, the Fed enacted an increase of 0.50%, which was the first step in easing after a historic run of rate increases. Prior to the December meeting, the FOMC raised short-term rates at an unprecedented pace, hiking by 75 basis points for four consecutive meetings.

With the March rate hike, the Fed made it clear that the fight against inflation takes precedence over troubles in the banking sector. It remains to be seen if the FOMC maintains such a stance in May. 

Some experts argue that the Fed should pause its campaign of rate hikes lest it cause further damage to the financial sector. Wobbly banks, to say nothing of outright bank failures, are deflationary in and of themselves, they maintain. Indeed, some economists calculate that the retreat in bank lending due to the crisis is equivalent to a Fed rate hike of 1.5%.

Other experts argue that another quarter-point increase is necessary to curb inflation and, perhaps more importantly, maintain the Fed's credibility.

Either way, for those wondering "when is the next Fed meeting?," have a look at the schedule, courtesy of the FOMC, below.

2023 Fed Meetings Calendar

• January 31 to February 1
• March 21 to 22
• May 2 to 3
• June 13 to 14
• July 25 to 26
• September 19 to 20
• October 31 to November 1
• December 12 to 13