Traders signal offers in the S&P 500 stock index futures pit during morning trading at the Chicago Board of Trade October 24, 2008 in Chicago, Illinois. U.S. stocks plummeted this morning following a sell off in the global markets.Scott Olson/Getty
- US futures and European stocks are up in anticipation of the Federal Reserve cutting its forecast for interest-rate hikes this year.
- However, the Fed is likely to reduce its economic growth forecasts.
Traders drove US futures and European stocks higher on Tuesday as they anticipated the Federal Reserve would commit to just one or even zero interest-rate hikes this year.
Weak inflation, signs of a global economic slowdown, and stock market volatility at the tail end of 2018 could prompt the Fed to cut its forecast of two planned rate increases this year.
"Owing to a weaker run of economic data, the Fed are expected to rein in the number of expected interest rate rises, which currently sits at two across the year," said Jasper Lawler, head of research at London Capital Group. "Close attention will also be paid to any plans to run down the balance sheet and the Fed's economic forecasts.""The prospect of low rates for longer is music to the ears of equities, as firms benefit from lower borrowing costs," he said.
The prospect of low rates for longer is music to the ears of equities, as firms benefit from lower borrowing costs.
The Federal Open Market Committee adopted a "patient" stance towards future rate hikes at the end of January, after lifting rates four times last year.
Economists also expect the Fed to lower its economic growth projections, according to the Financial Times. The gloomier outlook comes amid rallies in stock markets.
The FOMC monetary policy announcement is due on Wednesday at 4.00 Washington time.
Here's the market roundup as of 9.02 a.m. (5.02 a.m. ET):Get the latest Gold price here.