#FOMCMeeting The Federal Open Market Committee (FOMC) meeting that began on May 6, 2025, and concludes on May 7, 2025, is the third of eight scheduled meetings for the year. Here’s a summary of the latest news and expectations surrounding this meeting based on recent reports:
- **Interest Rate Expectations**: The FOMC is widely expected to maintain the federal funds rate at its current range of 4.25% to 4.5%, where it has been since December 2024. Economists and market indicators, such as the CME Group’s FedWatch tool, suggest a 97% probability of no rate change at this meeting. This expectation stems from the Fed’s cautious approach amid economic uncertainties, particularly due to President Donald Trump’s tariff policies.
- **Impact of Tariffs**: Trump’s “Liberation Day” tariffs, announced in April 2025, have introduced significant uncertainty. These include 145% tariffs on most Chinese goods and other levies on trading partners, though some were paused for 90 days to allow trade negotiations. Fed Chair Jerome Powell and other officials have noted that these tariffs could lead to higher inflation and slower economic growth, complicating the Fed’s dual mandate of price stability and maximum employment. The FOMC is likely to assess how these policies might affect the economic outlook.
- **Economic Context**: Recent data shows inflation at 2.4% in March 2025, close to the Fed’s 2% target, and a robust labor market with low unemployment. However, the Fed is wary of potential stagflation risks—higher inflation coupled with slower growth—prompting a “wait-and-see” stance. The minutes from the March 18–19, 2025, meeting highlighted concerns about “difficult tradeoffs” if inflation persists while growth weakens.
- **Trump’s Pressure**: President Trump has publicly urged the Fed to cut rates, criticizing Powell for being “too late and wrong” on monetary policy. Despite this, analysts, including Goldman Sachs’ Jan Hatzius, believe the Fed will resist political pressure and base decisions on economic data, particularly labor market conditions and inflation expectations. There’s also speculation about Trump exploring options to remove Powell, though this remains uncertain and legally complex.
- **Market and Analyst Sentiment**: Markets anticipate no rate cuts in May, with some analysts pointing to a possible cut in July (80% probability per FedWatch) or later, depending on how tariff impacts unfold. Wall Street will closely watch Powell’s press conference on May 7 at 2:30 p.m. EST for hints about future policy, especially since fresh quarterly forecasts won’t be released until June.
- **Powell’s Stance**: Powell has emphasized the Fed’s independence and commitment to data-driven decisions. He’s cautioned that tariffs could disrupt the “soft landing” achieved by taming inflation without a recession. The FOMC’s statement and Powell’s remarks will be scrutinized for any signals about rate cuts in June or beyond.
- **Social Media Sentiment**: Posts on X reflect mixed views. Some users speculate about imminent rate cuts, while others, citing Polymarket data, see a 90% chance of no change on May 7. These posts are not definitive but highlight public and investor anticipation.