The actions of the Fed remain the focus of the financial markets.
On May 7 local time, the Federal Reserve will announce its latest interest rate decision, with investors hoping for a quick interest rate cut. However, the market generally expects the Fed to maintain interest rates at this meeting, with a rate cut possibly occurring in June.
Analysts indicate that the focus of this meeting will be on any signals from the Federal Reserve regarding the possibility of interest rate cuts later this year due to tariffs. The Fed needs to balance supporting the economy with concerns about inflation from tariffs. Dominic Pappalardo, Chief Asset Strategist at Morningstar Wealth, stated: 'The Fed has the ability to help the economy and boost the market by adjusting interest rates. If officials begin to hint that their concerns about inflation are diminishing, it indicates that the Fed is a step closer to cutting rates, which would be welcomed by the financial markets.'
Recently, President Trump’s public criticism of Fed Chairman Powell reflects the government's strong expectations for interest rate cuts. Powell has stated that the Fed must ensure that tariffs do not trigger more sustained inflation before considering rate cuts. Previously, Trump suggested the possibility of seeking to fire Powell, raising concerns in the market about the independence of the Fed.
According to overseas media reports, Michael Gibson, the director of the Federal Reserve's regulatory division, will leave his position at the end of the year after serving for over thirty years. Michael Gibson led a department responsible for overseeing and monitoring Wall Street lending institutions, which implements the Fed's 'stress tests.' Industry insiders stated that as Michael Gibson announces his departure, the nominee for the vice chair of regulatory affairs at the Fed, Michelle Bowman, is awaiting Senate confirmation, and her attitude towards banking regulation will be more lenient than that of Michael Gibson, potentially ushering in an era of relaxed regulation on Wall Street.
In addition to the Fed, the Bank of England is also about to hold a monetary policy meeting. Due to persistent inflation, the Bank of England has cut rates less than the European Central Bank and the Fed since last summer. Bank of England Governor Bailey emphasized that the central bank needs to act cautiously amid rising inflation and economic stagnation in the UK. Although officials maintain a cautious stance towards the tricky domestic price and wage pressures in the UK, if US tariff policies weaken global demand, the result may suppress inflation in the UK.
For emerging markets, these countries have traditionally been relatively susceptible to changes in US trade policies. In early April, the Reserve Bank of India cut the benchmark interest rate by 25 basis points to 6%, and the Reserve Bank of New Zealand announced a cut of 25 basis points to 3.5%. HSBC believes that as inflation concerns recede, some central banks in emerging economies may prioritize stimulating economic growth through rate cuts.
Besides interest rate cuts, global central banks still seem keen on buying gold. The World Gold Council recently released the Global Gold Demand Trends Report for Q1 2025, showing that the total global gold demand (including over-the-counter trading) reached 1,206 tons in Q1, a year-on-year increase of 1%, the highest level since 2016. In terms of gold purchases, the report indicates that global central banks net purchased 244 tons of gold in Q1 2025, a year-on-year decrease of 21%, but still in line with the average quarterly levels of the past three years, indicating that gold purchases by global central banks remain strong.
