FOMC Meeting Summary (May 6–7, 2025)
The Federal Reserve is widely expected to maintain interest rates at 4.25%–4.50% during its May meeting, continuing its "wait-and-see" stance amid economic uncertainty driven by President Trump’s tariffs and mixed data .
Key Factors Influencing the Decision:
1. Strong Labor Market: April’s jobs report showed 177,000 new jobs, with unemployment steady at 4.2%, supporting the case for rate stability .
2. Tariff Risks: Trump’s aggressive trade policies have heightened stagflationary risks (slower growth + inflation), though hard data (e.g., GDP, consumer spending) remains resilient .
3. Inflation Concerns: Core PCE inflation at 2.6% (above the 2% target) discourages immediate cuts .
Future Outlook: Markets anticipate rate cuts starting in July (56% probability) if labor markets weaken, but some analysts warn delays until late 2025 are possible . Political pressure from Trump for cuts is unlikely to sway the Fed’s data-driven approach .
For live updates, the Fed’s announcement and Powell’s press conference will stream at 2:00 PM EST on May 7.
