#FOMCMeeting The Federal Open Market Committee is meeting amid heightened economic uncertainty, amplified by geopolitical tensions (especially between Israel and Iran), tariff-driven inflation risks, and signs of cooling U.S. economic momentum. Most observers expect the Fed to hold the federal funds rate steady at 4.25 %–4.50 %, a level it has maintained since last December .
Key domestic indicators—including retail sales and industrial output—are anticipated to show weakness in May, reinforcing concerns about stagflation: slower growth coupled with sticky inflation . While headline inflation has eased somewhat (with April’s PCE at ~2.1 % and CPI softer than expected), uncertainties around trade policy, fiscal deficits, and oil price volatility could sustain inflationary pressures .
Ahead of Wednesday’s decision, Fed officials maintain a “wait-and-see” stance. The committee is poised to reaffirm that monetary policy remains “appropriately restrictive,” but will avoid committing to future rate cuts until clearer data emerges on economic growth and inflation .
The real focal point will be the Summary of Economic Projections (the “dot plot”) released alongside the statement. Market consensus anticipates a modest shift toward fewer cuts this year—with perhaps one cut penciled in for Q3 or Q4—reflecting a more cautious and uncertain economic outlook .
Fed Chair Jerome Powell will host a press conference on Wednesday afternoon. Markets will hone in on his remarks concerning the balance of risks—tariffs, geopolitical oil shocks, and economic softening—and any forward guidance tied to potential rate cuts.