It’s been a rocky ride for the Federal Reserve this year.
Many a time, a rate hike was on, then off, then on again, then way off again. We’ll know more soon — the Fed kicked off its two-day meeting on Tuesday and will end it with a press conference on Wednesday.
But the back and forth this year isn’t appreciated on Wall Street. Right now the odds of a rate hike on Wednesday are 2%.
“It looks like June is off the table…the Fed is in a wait and see mode,” says Anthony Bedikian, head of global markets at Citizens Bank.
Here’s how the Fed got to this point from just six months ago, and where it’s headed.
December: 4 rate hikes coming next year
In December, Fed officials raise rates for the first time in nearly a decade and signaled that they would raise rates four times in 2016. It was a landmark moment for the U.S. economy and signaled its recovery from the recession.
A forecast for four rate hikes indicated that the Fed would likely raise rates in March, June, September and December — the meetings that have press conferences.
January: Markets freak out, investors expect 2 rate hikes
Global markets plummet amid fears about China’s economy and currency and falling oil prices. A major disparity happens between the Fed’s expectations and Wall Street’s projections. Early in January, the Fed’s Vice Chair Stanley Fischer maintains that four rate hikes in 2016 are possible. But Wall Street expects only two.
March 16: Fed calls for 2 rate hikes, Wall Street down to 0 hikes
Then Fed officials turned around and significantly changed their forecast of rate hikes for this year to two, down from four. By this point Wall Street was one step ahead — dialing down its forecast to zero rate hikes for the year. In the same meeting, the Fed also lowered its expectations for economic growth. Yellen raises a yellow flag on “global risks” that could hurt the economy.