What will Powell say at the Federal Reserve meeting tonight?

It is almost certain that there will be no interest rate cut in May, and everyone is more concerned about whether there will be a cut in June or July. The probability of no rate cut in June has risen to 69.8%, and for July, the probability of a 25 basis point cut has reached around 57%. Therefore, the market is likely betting on a rate cut in July.

The delay in the rate cut is still due to the recent GDP and non-farm payroll data, which indeed does not warrant an urgent rate cut. However, the market has already priced in the no rate cut scenario, so it is not considered a negative signal. What is really concerning is what Powell will say.

Goldman Sachs chairman Kaplan, also a former Federal Reserve official, recently stated that Powell said in 2022 that to bring inflation down to 2%, we might have to accept an economic recession!

Currently, the U.S. economy is not in recession, although the government has started to cut spending, which may increase economic risks. But no recession means no recession; the Federal Reserve talks based on data, and unless the economy is clearly on a downward trend, they will not easily cut rates. He believes that there may only be two rate cuts by 2025, and the Federal Reserve will wait for risks to emerge before intervening, rather than acting preemptively.

Considering all of the above, Powell is likely to maintain a hawkish stance, emphasizing that there is no rush to cut rates and that they will remain cautious.