Federal Reserve

In that lieu, nothing else might matter for markets especially as we come off the US CPI data from yesterday here. Headline annual inflation continues to fall but core annual inflation isn't coming off quite as fast. But when all is said and done, we're now looking at just less than 5% odds of a rate hike today.

If the Fed needed some backing to "skip" a meeting, well they certainly got it and markets have vouched for that.

The question now though, is whether the supposed "skip" will turn into an extended "pause" come next month. It is easy to take a light breather but not so much if policymakers plan to convert that into something more.

Mind you, this is a market that has went from pricing in three rate cuts by year-end to approving of the Fed's message of higher for longer. So, to put traders and investors through another hoop, that's not something they would find as well communicated by the Fed.

In any case, today's decision is going to be a really interesting one. It is the first in a while in which markets debated between no change and a rate hike. And it seems like now markets are expecting a hawkish pause or something along those lines as the Fed will not want to relent in the fight against inflation.

However, it would be careless for Powell to pre-commit to a rate hike in July and I would not expect that. Will that in turn be reflected as a more dovish stance? Perhaps. Adding to the mix today will be the infamous dot plots and economic projections. If those vindicate a higher for longer narrative, in which direction should markets follow?

Going by yesterday's reaction, things may not be that straightforward it would seem.