US stock markets are trading in a tight range as investors adopt a defensive posture ahead of the Federal Reserve’s policy announcement on Wednesday.
The cautious stance reflects growing uncertainty surrounding the central bank’s next move, with traders now pricing in a non-zero probability of a surprise interest rate hike.
While the market consensus remains anchored on an expected pause in the federal funds rate, the risk premium has shifted.
Attention is now fixed on Fed Chair Kevin Warsh’s post-meeting remarks, which could provide critical clarity on the committee’s assessment of inflation and growth data.
Any deviation from the expected dovish or neutral tone could trigger a sharp repricing across asset classes.
The tension stems from a combination of persistent inflationary pressures and mixed economic signals that have complicated the Fed’s policy path.