#FOMCMeeting

The Fed’s next interest rate decision will be announced tomorrow. Recently, President Trump urged Fed Chair Powell to cut rates again, hinting he that he might have to "force something" if inflation continues to ease and rates remain unchanged.

* its latest FOMC meeting, maintaining the benchmark interest rate at **5.25%-5.50%** for the seventh consecutive meeting. While inflation remains elevated, Chair Jerome Powell signaled growing confidence in the disinflationary trend, hinting at potential policy adjustments later this year.

Key Takeaways:

1. **"Higher for Longer" Persists:** Rates remain at a 23-year high as the Fed seeks "greater confidence" inflation is sustainably moving toward its 2% target.

2. **Slower Balance Sheet Runoff (QT):** Starting in July, the Fed will reduce the pace of its Treasury securities roll-off from $60 billion to $25 billion monthly—a move to ease liquidity pressure without halting contraction.

3. **Dovish Shift in Projections:** Updated "dot plots" revealed **one projected rate cut in 2024** (down from three in March), but projections now show **four cuts in 2025** (up from three), reflecting cautious optimism.

4. **Inflation Progress Noted:** Powell acknowledged "modest further progress" on inflation but emphasized the need for sustained improvement, particularly in services.

5. **Labor Market Resilience:** The Fed sees the jobs market cooling gradually but remains strong overall, reducing urgency for immediate cuts.

Market Reaction:

* Stocks rose moderately on the QT taper and Powell’s acknowledgment of disinflation.

* Treasury yields dipped slightly, particularly in the 2-10 year segment.

* Traders increased bets on a **September rate cut** (now ~65% probability).

Outlook:

The Fed remains data-dependent. While a July cut is highly unlikely, **September is in play** if upcoming inflation (CPI, PCE) and employment reports align with the Fed’s evolving outlook. Patience remains the watchword, but the pivot discussion is now firmly underway.