Tonight, the Federal Reserve will hold a meeting, expected to maintain the federal funds rate at 4.25% - 4.50% to address inflation risks triggered by tariffs and the uncertainties brought by robust economic growth. The updated economic forecast summary and dot plot may suggest reducing the number of interest rate cuts in 2025 to two, starting in September.
Federal Reserve Chairman Powell is expected to emphasize the principle of 'data dependence' in the press conference, indicating that more evidence is needed to support the decision to cut rates, and mentioning the lagging effects of tariffs on inflation transmission. Despite Trump's pressure for an immediate rate cut, Powell may reiterate the Fed's independence, stating that policy decisions are based on a balance of economic data, inflation, and employment.
