The Fed meets with uncertainty that penetrates the air. Here’s what you’ll be able to count on
Jerome Powell, chairman of the US Federal Reserve, will hold a press conference on March 19, 2025 after the meeting of the monetary policy committee in the Federal Reserve in Washington, DC, on March 19, 2025.
Roberto Schmidt | AFP | Getty pictures
The Federal Reserve will make absolutely nothing to do with a strong incentive to do nothing on Wednesday.
In view of the unresolved questions about the tariffs of President Donald Trump and an economy that signals both considerable strengths and weaknesses, the political decision -makers can only do little for the moment, unless the events develop.
“It will be uncomfortable at this meeting. The Fed has no forecast to convey something about the next few sessions,” said Vincent Reinhart, a former long -time official and now chief economist at BNY Investments. “The Fed has to wait for two things: it can be seen that the directive actually uses.
In fact, the pricing for the futures market means almost no chance of a interest rate at the session and only about a 1-in-3 probability of a move at the meeting from June 17th to 18th.
In the past week, the market expectations were postponed to mixed economic signals and signs that Trump becomes at least a little less aggressive in his tariff approach. The White House has signaled that several trade agreements are about to be completed, although none has yet been announced.
Reinhart said that his company connected two cuts this year, which is a bit closer than the market expectations for three reductions from July. A week ago, the markets set up to four cuts from June.
Direction of Powell
The chairman of Fed, Jerome Powell, remains at his press conference after the meeting to explain the thinking of him and his colleagues about where they see politics.
“The other unsatisfactory part is that you don't know what you will do in June,” said Reinhart. “So he has to say that everything is on the table. He always says it, but this time he will have to mean it.”
However, Powell will certainly ask the question of how the political decision -makers see the latest data fire that has painted a picture of the economy with pessimism from consumers and managing directors who do not yet have to insert themselves into hard numbers such as expenses and employment.
While the gross domestic product fell with an annual rate of 0.3% in the first quarter, it was largely the product of importing before Trump's tariff announcement of April 2. The April wage and salary billing report in April showed that the attitude continued at a solid pace, whereby the economy added a better 177,000 jobs for the month.
At the same time, the surveys for the production and the service sector show profound concerns about inflation and the effects of tariffs. The optimism of the consumer is also in the case of several years, while the inflation expectations in several decades.
Everything adds up to a linchpin for Powell and Co., at least through the June meeting.
This time no 'point plot'
“The FED will project in its explanation in your press conference, patience. Wait to see further data,” said Tony Rodriguez, head of the strategy for fixed income at Nuveen. “Too much uncertainty to act now, but prepare yourself to act when you see weakness on the labor market.”
Nuveen also expects only two cuts this year and two more next year, since the Fed Navigates slows down growth and price increases with customsization.
“Our expectation is that you will not see anything at this meeting,” said Rodriguez. “You just have to see hard data that we will not really realize until you call June or July. I would consider the September meeting as the first cut.”
In this meeting, the FED does not update its economic projections or its “point directory” of the interest expectations of the individual members. That will come in June. Therefore, the Committee for the Open Market Committee for the installment set in the explanation after the meeting and the Powell press conference in order to drop possible information about collective thinking.
“We believe that it will take a few months for enough hard data evidence to be accumulated to enable a cut,” said Goldman Sachs Economist David Mericle in a note. Goldman expects the FED to shorten in July, September and October to derive the economic weakness that the company expects to have priority over inflation problems.
A wild card in the equation: Trump has reduced the Fed, as he did in his first term, the interest as inflation edges closer to the 2nd target of the central bank.
Reinhart, the BNY business scientist, does not see the Fed bending to Trump's sake or break the ranks, although some members who showed a department for politics showed the statements of members.
“The White House did a favor to keep his committee together. Because if a family is criticized from the outside, it is generally less willing to criticize each other,” said Reinhart. “Criticize Jay Powell now and put together with the president? Probably not if you have worked your whole life in the Federal Reserve system.”
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