#FOMCMeeting The Federal Reserve’s FOMC is kicking off its two-day policy meeting today and will wrap up tomorrow, May 7, 2025. Most market watchers expect the Fed to keep interest rates unchanged in the current range of 4.25% to 4.50%, a level it’s held since December.

What’s Happening in the Economy

The latest economic data paints a mixed picture. The economy shrank by 0.3% last quarter, but the job market is still holding up—177,000 jobs were added in April. That said, new tariffs introduced by President Trump have shaken business confidence and hurt manufacturing, raising fears of stagflation (a mix of high inflation and weak growth).

The Fed’s Dilemma

These tariffs could push prices higher while also putting pressure on employment. That puts the Fed in a tough spot as it tries to balance its goals of keeping inflation under control and supporting job growth.

What Markets Are Watching For

Investors are closely watching Fed Chair Jerome Powell's press conference after the meeting. While a rate cut this week is unlikely, markets are betting on potential cuts in July or December—depending on how the economy holds up in the months ahead.

How Markets Are Reacting

Gold: Prices have jumped above $3,300 per ounce as investors seek safety amid uncertainty and a weaker dollar.

Bonds: Bond traders are staying cautious and holding neutral positions, waiting to see what the Fed says.

Stocks: U.S. stock futures are slightly down after a nine-day rally in the S&P 500, as traders await clues on where interest rates are headed.

We’ll get the Fed’s official policy statement on Wednesday at 2:00 p.m. ET, followed by Powell’s press conference at 2:30 p.m. All eyes will be on any hints about the Fed’s next moves.