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🏛️ FOMC Meeting: May 6–7, 2025
The Federal Reserve's two-day FOMC meeting is currently underway, with the policy decision scheduled for announcement on May 7 at 2:00 p.m. ET (11:00 p.m. PKT).
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📉 Interest Rate Outlook
The Fed is widely expected to maintain the federal funds rate at its current range of 4.25%–4.50%. According to CME Group’s FedWatch tool, there is a 99% probability that rates will remain unchanged at this meeting.
This decision follows a period of aggressive rate hikes in 2022 and 2023, aimed at curbing inflation. The Fed began reducing rates in late 2024, but has since adopted a cautious approach due to mixed economic signals.
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📊 Economic Indicators
GDP: The U.S. economy contracted by 0.3% in Q1 2025, indicating potential economic slowdown.
Jobs: April saw the addition of 177,000 jobs, suggesting a still-resilient labor market.
Inflation: The Personal Consumption Expenditures (PCE) index has shown a slight increase, adding complexity to the Fed's rate decisions.
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🗣️ Political Pressure
President Trump has been vocal in urging the Fed to cut interest rates, arguing that inflation has cooled and lower rates are needed to stimulate economic growth. However, Fed Chair Jerome Powell has emphasized the importance of data-driven decisions and maintaining the central bank's independence.
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📈 Market Implications
Financial markets are closely watching the Fed's decision and Powell's subsequent press conference for any hints about future rate cuts. While a rate cut is unlikely at this meeting, the probability of a cut in July has increased to 80%, according to CME FedWatch.
Investors are also monitoring the potential impact on various asset classes, including equities and cryptocurrencies, which could react to any signals about the Fed's future policy direction.