#FOMCMeeting
đĻ What to Expect
No rate change anticipated: The Fed is expected to leave interest rates unchanged at 4.25%â4.50%. Both market consensus and expert commentary strongly lean towards a hold until at least September, with futures pricing in a likely first cut in September/December .
Cautious âwait-and-seeâ tone: In a backdrop of mixed dataâlabor remains steady (~4.2% unemployment), inflation hovering near target, but with mounting risks from tariffs and geopolitical tensionsâthe Fed is expected to emphasize data dependency. The Summary of Economic Projections (âdot plotâ) may show fewer cuts planned for 2025 .
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Key Risks on the Fedâs Radar
Geopolitical uncertainty & oil prices: Middle East developments (IsraelâIran tensions) have created volatility in oil markets and inflation expectationsâadding to caution .
Trade and tariffs: The impact of new tariffsâpromoted by President Trumpâis still unfolding, fuelling inflation worries and prompting the Fed to stay on hold and preserve policy flexibility .
Political pressure: Trumpâs demand for steep rate cuts could risk compromising Fed independence. Officials are likely to reiterate their commitment to non-political, data-driven decision-making .
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What to Watch for Wednesday/Thursday
1. Policy statement & dot plot â Look for revisions to the Fedâs 2025 outlook and timing for rate cuts.
2. Chair Powellâs press conference â Verbatim wording around inflation, tariffs, and the economic outlook will be critical.
3. Economic signals â Investors will be paying close attention to dovish/hawkish cues; markets are already pricing in ~50â¯bps of cuts by yearâend .
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Why It Matters
The FOMCâs decision will set the tone for the rest of the year. If the Fed signals a slower path for cuts, it could dampen markets and strengthen the dollar. Conversely, forward guidance hinting at cuts could boost equities and risk appetite.
