Fed's Decision Hangs on Market Response and Calls for Pause

The Federal Reserve's decision on interest rates is likely to be influenced by the market's response in the coming days. While there is a case for a pause in rate hikes due to concerns about credit events, the Fed has expressed confidence in its ability to address financial stability issues while focusing on restoring price stability. The odds of a 25 basis point hike are high, but projections for rates in the future are vulnerable. The markets are currently pricing in a rate of 3.95% in January 2024, with a terminal rate of 4.83%.