“Today's decision about interest rates should come as no surprise as we already have a 97% probability of no rate cuts and should already be priced in. Something that still is not priced is the kind of remarks we are going to see from Powell during the press conference today. Decision on rate cuts will be announced at 7:00 PM UK time followed by a press conference at 7:30 PM.
Remember that Market participants would be closely looking for any remarks about quantitative easing and any dovish stance is going to be bullish for the market. On the other hand, just like last time, if Powell mentions how they expect slower growth and inflation risks due to higher tariffs, this may result in markets reacting negatively resulting in lower probability for rate cuts in July because at this time, street still expexts atleast three rate cuts for 2025. But Fed still has no data to make this decision with strong labor market, steady unemployment, lower Q1 GDP numbers, constant risk of inflation, higher number of imports due to tariffs. So, we know that FED would need a more definitive evidence to consider the possibility of rate cuts and any hawkish remarks are going to hurt the market sentiment and they are most likely going to adopt a wait and see stance for now.”