Fed to announce Interest Rate Decision but attention remains on Bernanke

All eyes will be turning to the Federal Reserve later this evening, who will be announcing their latest Interest Rate decision. At the same time, much has been made of Fed Chairman Ben Bernanke’s decision to deliver a press conference and Q&A session; a communication method more typically associated with his counterpart at the European Central Bank Jean-Claude Trichet.

Citing transparency as the reason for enhanced Fed openness, there are already those who expect Bernanke to maintain a ‘dovish’ stance; an attitude which has typified the Fed Director in recent months. Nonetheless, the remarks made by Bernanke in his first European style conference will be closely scrutinised by traders, with any deviation from the earlier statement likely to incite significant movement.

With tomorrow’s first quarter GDP report expected to show below trend growth, it seems increasingly likely that Bernanke will remain dovish, however recent unease amongst the more hawkish members of the Monetary Policy Committee could see more immediate calls for action. With Quantitative Easing due to remain in effect until the end of June; and with Bernanke expected to have remained dovish; any hawkish remarks pertaining to US monetary policy seem unlikely at this time. Whilst the debate will invariably have seen both sides voice their concerns, whether these are translated into action is yet to be seen.

The Federal Reserve will be announcing their Interest Rate decision at 1630 GMT.