What are you searching for ?

Business

The Fed’s New Rate Projections .. What to Expect Today ?

The Fed’s New Rate Projections .. What to Expect Today ?
 

The Federal Reserve is set to deliver its latest update on interest rate projections this Wednesday, and financial markets are bracing for potential shifts in the central bank’s economic outlook. While the Fed is widely expected to hold interest rates steady, this meeting presents an opportunity for officials to recalibrate their views on inflation, GDP growth, unemployment, and the future path of interest rates.

 

Key Expectations

Fed Chair Jerome Powell and the Federal Open Market Committee (FOMC) have emphasized a patient approach in recent months, signaling that they are in no rush to make drastic policy changes. The central bank’s benchmark interest rate is currently targeted in a range of 4.25% to 4.5%, and market analysts see virtually no chance of a rate cut this week. However, the Fed’s updated economic projections, including its “dot plot” of individual members’ rate expectations, could offer critical insights into what lies ahead.

 

What Could Change?

1. Interest Rate Cuts Possibly Delayed:

The Fed’s December 2024 projections included two rate cuts in 2025. However, given the current economic landscape, the committee may adjust this outlook. Scenarios range from maintaining the two cuts, reducing them to one or none, or even adding an improbable third cut as a hedge against economic slowdown.

2. Inflation and GDP Adjustments:

Recent data suggests that the Fed could raise its inflation forecast for 2025 while scaling back its GDP growth projection, which previously stood at 2.1%. Chair Powell will address these updates during his post-meeting press conference.

3. Quantitative Tightening:

The Fed’s quantitative tightening program, which involves reducing its balance sheet by allowing maturing bonds to roll off, is another area of interest. Markets anticipate the program could conclude later this year.

 

Factors Influencing the Fed’s Decisions

The Fed’s cautious stance reflects the uncertain backdrop of global economic conditions and domestic policies. President Donald Trump’s trade and fiscal policies, including potential tariff escalations, add complexity to the inflation outlook. Economists are concerned that tariffs could reignite inflationary pressures, prompting the Fed to tread carefully.

Dan North, senior economist at Allianz Trade North America, summed up the likely tone of the meeting: “They’re basically going to say, ‘You know what, we are in no hurry at all now.'”

 

Market Implications

Investors are paying close attention to the Fed’s signals, particularly as major stock indices hover near correction territory with declines of 10% or more from recent highs. The markets have priced in at least one rate cut by June and a 50% likelihood of a second cut by the end of the year, based on CME Group’s FedWatch tool.

However, some analysts argue that markets may be overly optimistic. Thierry Wizman, global FX and rates strategist at Macquarie, believes the Fed might push one rate cut into 2026, leaving only one cut in the median forecast for 2025.

“In effect, markets appear to have gotten too dovish on the Fed,” Wizman said. “The FOMC meeting may leave many questions unanswered, as will the press conference by Jay Powell.”

 
 


Crypto and Metals



btc us92,592.6 USDBitcoin
eth us1,746.69 USDEthereum
xrp us2.15224 USDXRP
xau us3,330.56 USDGold Ounce
xag us33.3611 USDSilver Ounce
xpd us947.777 USDPalladium Ounce
xpt us978.569 USDPlatinum Ounce


Important Stocks >>




Latest News

Business

The world’s largest sovereign wealth fund, managed by Norges Bank Investment Management, has reported a staggering $40 billion loss ..

Business

In a statement that underscores the growing strain in U.S.-China economic relations, China’s Ministry of Commerce confirmed there are ..

Business

The recent first-quarter earnings report from SAP, the German software giant, offers a masterclass in resilience and adaptability in ..

Business

The European Union’s decision to impose substantial fines on two of the world’s largest tech companies, Apple and Meta, ..