U.S. stock index futures were muted on Wednesday as investors stayed away from placing big bets ahead of the Federal Reserve’s much-anticipated decision on interest rates.
The central bank is widely expected to hike the fed-funds rate by half a percentage point to 4.25-4.50%. The decision will be announced at 2 p.m. ET (1800 GMT) and will be followed by Chair Jerome Powell’s press conference.
Data on Tuesday showed that U.S. consumer prices grew at their slowest pace in about a year in November, sparking an early rally on Wall Street, with the S&P 500 (.SPX) jumping as much as 2.8% to a three-month high.
The benchmark index, however, closed sharply off its high on concerns over the central back remaining aggressive.
“This CPI release ultimately cements the case for a downshift in the pace of Fed rate hikes on Wednesday,” BCA Research said in a note.
“Although it raises the odds of a pause in H1, labor market dynamics remain too hot to call for rate cuts in the near term.”
Strategists at Morgan Stanley are expecting the central bank to increase rates by another 25 basis points at its February meeting, but see no further increases in March, leaving the peak fed-funds rate at 4.625%.
In contrast, money market participants are expecting two more 25 basis-point hikes next year, keeping the terminal rate at 4.82% by May 2023.
At 6:06 a.m. ET, Dow e-minis were down 1 point, S&P 500 e-minis were down 1.25 points, or 0.03%, and Nasdaq 100 e-minis were down 10.75 points, or 0.09%.
Among stocks, Tesla Inc (TSLA.O) slipped 1% in premarket trading after a Goldman Sachs analyst trimmed the price target for the electric vehicle maker’s stock.