The Federal Reserve will release its June rate decision on Wednesday, with the market expecting the central bank to hold interest rates steady.
Bank of America Securities senior US economist Stephen Juneau and Ritholtz Wealth Management chief market strategist Callie Cox join Morning Brief to discuss their expectations for the Fed meeting as geopolitical tensions in the Middle East rise.
Steven, that brings me to what the Fed is going to be looking across and the data points, the hard data that they're going to be evaluating at their meeting. And 50 basis points, it still seems like the market's trying to factor that in by the end of the year. What do you think is the kind of if this then that of their own calculation for us getting to 50 basis points?
Well, first, I think what we're going to see at the meeting is we get these updated projections, and we expect the Fed to go from two cuts this year to one, and just acknowledge that the economy's holding up. When we look at the labor market data, it's been good. Uh, it's been stable. The labor market's not showing signs of significant deterioration. And then inflation's still above target, and they still expect inflation probably to move away from them. So we expect their inflation projections to move higher as they account for the tariff effect. Now we didn't get that in the latest data, but I think this is what they're going to be watching most closely moving forward is how does the inflation data evolve and then how does the labor market data evolve. If inflation moves away from the target and the labor market remains stable, then it's going to going to be difficult for the Fed to get two cuts in this year. We're in the camp that they they don't manage to get any cuts in this year.
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