The US Federal Reserve (Fed) will announce its interest rate decision at 19:00 GMT on Wednesday, January 31, and as the announcement approaches, here is what analysts and researchers at 10 major banks are predicting.

No change in policy is expected as the Fed will keep rates in a range of 5.25% to 5.50% for the fourth consecutive meeting. Chairman Jerome Powell's press conference will be key. Investors will be focused on any potential pushback from the Fed against market speculation of a rate cut.

Danske Bank

We expect the Fed to keep monetary policy unchanged. We expect the Fed to cut rates for the first time in March and a total of four times in 2024. The Fed is well positioned on both sides of its dual mandate. Cooling inflation requires lowering interest rates to neutral levels, but solid economic growth and the labor market allow the Fed to move gradually. The Fed is also beginning to think about fine-tuning the finishing touches on quantitative easing, which we expect to continue at least through the end of the year. Overall, we think the risks around the meeting are tilted towards slightly higher yields and lower EUR/USD.

Commerzbank

The Fed will not change interest rates, leaving the target range for federal funds at 5.25% to 5.50%. However, the Fed is likely to gradually discuss the timing and pace of continued balance sheet reduction.

ING

The Fed is widely expected to keep its federal funds target range unchanged at 5.25 percent to 5.50 percent while continuing to shrink its balance sheet through quantitative tightening. We think it's only a matter of time before the Fed cuts rates, but we think the starting point will be in May. Compared with market expectations, we continue to see some downside risks to growth in the coming quarters, as the legacy of tight monetary policy and credit conditions weigh on economic activity, and household savings accumulated by COVID-19 reduce support for economic activity. We forecast that the Fed funds target range will be lowered to 3.75%-4.00% by the end of the year.

Td Securities

The FOMC is widely expected to leave the Fed funds target range unchanged at 5.25 percent to 5.50 percent. In contrast to December, we expect Chairman Powell to convey a more balanced approach to the Fed's next policy steps, and the committee may prefer to be patient to ensure that the lower PCE inflation rate is sustained at the 2 percent target. The Fed is unlikely to indicate a timetable for rate cuts. Given the strength of the recent data, the question is whether the US is in for a repeat of last summer's aberration. We think not, as the combination of good data and low inflation remains a factor for the Fed to cut rates to prevent further actual tightening. Historical Fed rate-cutting cycles have been accompanied by steepening bull markets and dollar weakness.

Royal Bank of Canada Economics

The Fed is widely expected to leave its federal funds target range unchanged for the fourth straight meeting on Wednesday. The Fed will focus on any hint of a possible cut in the timeline. A new round of strong GDP data for the fourth quarter showed that the economy is still weathering higher interest rates better than expected. But the slowdown in price growth gives the Fed the flexibility to keep interest rates on hold for the time being - and lower them later this year, which we expect before the middle of the year, once the economy starts to slow significantly.

Abn Amro

We expect the Fed to remain on hold. There will be no updated forecasts at this meeting, and the market will focus on what Chairman Powell says at his press conference. We expect the Fed to maintain its recent tone of commentary, acknowledging continued progress on inflation but remaining vigilant given the recent resilience in economic activity. As the minutes of the December FOMC meeting show, there may also be hints that an early end to quantitative easing is possible.

Rabobank

We expect the FOMC to remain on hold, reaffirming its reliance on the data and its intention to proceed cautiously. The focus will be Powell's press conference and the extent to which he will push back (again) against market expectations for an early rate cut. We continue to expect the Fed to cut rates for the first time in June. Once it starts, we expect the Fed to continue to cut rates by 25 basis points each quarter.

NBF

The FOMC is widely expected to leave the federal funds target range unchanged at 5.25 to 5.50 percent while continuing to reduce the balance sheet. While the rate decision is pro forma, markets will be watching closely for the Fed's guidance on the near-term path of monetary policy. Those investors pricing in a March rate cut, which Fed fund futures put at about a 50 percent chance, will want to see the statement remove \ "when determining the extent of any additional policy tightening....... ", and select content that may warm up the March rate cut. The former may be achieved, but we do not believe that policymakers will be willing to introduce easing at subsequent meetings. Instead, we expect the Fed's stance to move significantly toward neutrality. We still expect the first rate cut to come in June. In addition to the path of interest rates, we will also be watching the discussion about the future of QT, which is receiving increasing attention from investors.

Citibank

The Fed is likely to leave policy rates unchanged at this week's FOMC meeting and may remove the "bias to hike" from its post-meeting statement. Fed Chairman Jerome Powell is likely to send a similar message to Governor Bob Warrell's a few weeks ago, that the Fed is in no rush to cut rates and will proceed cautiously. This will further reinforce market expectations for a rate cut in March, which is a low probability but still positive. Fed officials are also likely to discuss slowing and ending the process of reducing the balance sheet at this meeting, but will not unveil a final plan. In OCIS's base case, the Fed could either start a rate cut cycle in June with a quarter-point cut, or it could slow the pace of balance sheet reduction in June and finish by the end of the year.

Anz Bank

The FOMC's January meeting is an important opportunity for it to outline the framework for policy decisions this year. The FOMC is data-driven and will review policy on a case-by-case basis. Markets will be watching closely to see if a March rate cut is discussed. We believe that if a rate cut is imminent, Chairman Powell will make it clear. When the Fed begins to ease policy, we expect rate cuts to be gradual. The weakness in the core personal consumption expenditures (PCE) deflator in the fourth quarter may not be sustainable, judging by a range of data. We expect interest rate cuts to begin by the end of the summer. Ultimately, the pace of new data will determine the timing of the policy turn, and it is prudent to be wary of rate cuts starting in the spring.