My guess is that the Fed will not raise rates on Wednesday. The Fed likely made up its mind weeks ago to maintain the Fed Funds Rate where it is. Some suggest that the Fed will not make up its mind about rates until CPI data is released on Tuesday. I can’t see the Fed being that nimble, nor can I imagine Fed Chair Powell drafting two versions of his script, one where the Fed holds rates in place, a second where the Fed raises, and finishing up that script on Tuesday. Powell would never cut it that close to the Wednesday afternoon deadline.
Further, we know that interest rates will eventually go lower as the fiscal debt continues to climb higher. Below is a chart of the monthly interest expense on the public debt. The average interest rate on the public debt was 2.67% as of May 31st 2023. The U.S. Treasury certainly could not afford to pay the interest expense on the public debt were the $32 Trillion in debt outstanding to carry a 4-5% interest rate.
The below chart displays the average interest rate on the public debt outstanding which sat at 2.67% as of 05/31/2023.