Meetings of the United States Federal Reserve have become crucial events that capture the attention of investors, analysts, and market participants worldwide. One of the main reasons behind the significant volatility experienced on these specific days is attributed to the direct influence these meetings have on monetary policy, particularly in determining the Fed's interest rate.
The Fed's interest rate is a key indicator that affects a wide range of financial instruments, from bonds and loans to stocks. When the Fed gathers to make decisions on interest rates, all market participants are eager to obtain information about economic outlooks and future monetary policies. This creates a conducive environment for volatility, and consequently, the days on which these meetings take place are often characterized by sharp movements in financial markets. These movements can manifest both upward and downward, reflecting investors' sensitivity and rapid response to decisions and signals issued by the Fed. In this context, charts illustrating the dynamics of the S&P 500 during the Fed meetings in 2023 provide a visual representation of investor expectations and volatility.
