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US Federal Reserve Chairman Jerome Powell testifies to the Banking, Housing and City Committee on Congress Affairs “Monetary Policy Report” on the Capitol Hill in Washington, USA, February 11, 2025.
Craig Hadson | Reuters
Officials of the Federal Reserve are expected to hold interest rates this week, but adjust their views on the economy and possibly the future path to interest rates.
If the market prices are correct, there is practically no chance that the Central Bank’s policy will shift from the current level of their key interest rate aimed at 4.25%-4.5%. Chair Jerom Powell And his colleagues in recent weeks have advocated a patient who did not hurry to do anything.
However, as expected President Donald TrumpTrade and fiscal policy. This may include anything: from the settings in the forecast for inflation and economic growth to how often, if at all, they count on lower interest rates.
“There is no chance of cutting the environment, so all other things are becoming more important,” said Dan North, Senior Economist Allianz Trade North America. “They mainly say,” You know what we are not in a hurry now. “
Indeed, this was the Powell’s message and his federal open market. In A Speech earlier this month For economists in New York Powell insisted that “no need to hurry” when the central bankers are looking for “greater clarity” on where the Trump administration goes.
New forecast for GDP, inflation, unemployment
Thus, the public will be left to break through the updates that the Fed produces to its quarterly forecasts at interest rates, gross domestic products, unemployment and inflation. Based on recent data, the Fed can increase the inflation forecast in 2025 (in December, the forecast was 2.5% both in the title), reducing GDP projection (with 2.1%). Powell will take place with a regular press conference after the meeting.
In the bet issue, the open market federal committee will use its “point section” of the intentions of individual members.
There is a significant difference in what can happen. The Committee can retain the snow forecast for two cuts, remove one or both, or it is unlikely to add another as a statement that causes concern with potential slowing. It seems everything is on the table.
“I think this year it may be one or zero, especially if the tariffs follow,” North said. “I don’t think they will try to save the economy by reducing the performance because they know that when they are inflation, they will have to return and start over.”
Economists are worried Trump tariffs Inflation can re -inflation, especially if the president becomes more aggressive after the White House releases a global review of the tariff on April 2. If the Fed becomes more concerned about the inflation, it can be further reluctant.
Investors are right to be a concerned direction showing Fomc, said Thierry Wizman, Global FX and tariff strategists in Macquarie.
“This concern is suspected that the Fed is no longer” responsible “by refusing to control the macroeconomic policy towards the Trump administration,” Wisman wrote. “Given the current uncertainty and the recent increase in inflation expectations, the Fed can be difficult for the signal of three more speed decreases, and even two more. This can push one speed in 2026, leaving only one incision in the average” point “for 2025.
Markets still see two -three cuts
If the Fed decide to follow two cuts, it will probably only be “to avoid adding to the recent turbulence in the market,” said Goldman Sachs economist David Marys in the note.
Main Medium Stock Markets hover around the correction The territory or 10% abandon the highs.
In the past, under The idea of ”fed to put”, Markets expect the Central Bank to facilitate policy in response to the riots in the market. Traders do not expect the initial rate to be reduced by at least June, and prices in one additional quarterly point and about 50-50 chances per third step by the end of the year, according to the CME group, according to the CME group Fedwatch Measure Fed Funds Fempurt.
But it can even be too ambitious, Wisman said.
“Essentially, the markets appear to have also stood on the Fed, and instead of signaling its own perspective, the Fed can give distrust signals.
The Committee can also affect its “Quantitative delay” program, where it allows to set revenue levels from the bond maturation every month with the balance. The markets are widely hoped that the Fed will finish the program at the end of this year, and recent meetings have held a discussion on how to cope with the Treasury portfolio of 6.4 trillion. Central bank dollars and mortgages.
