The Fed will update its rate projections Wednesday. What to expect | Global News Avenue

Federal Reserve officials are expected to keep interest rates stable at this week’s meeting, but can adjust their perception of the economy and may be a path to future rates.

If the market is priced correctly, central bank policy makers have little chance to start at the current critical interest rate level, with a target range of 4.25%-4.5%. Chair Jerome Powell His colleagues have advocated a patient approach in recent weeks where they don’t need to rush to do anything.

However, they also expect them to drop clues from here in an uncertain context President Donald Trumptrade and fiscal policy. This could include adjustments from inflation and economic growth forecasts to the frequency at which they expect further reductions in interest rates.

“There was no chance to cut Wednesday, so everything else became more important,” said Dan North, senior economist at Allianz North America. “They basically say, ‘You know what, we’re not in a hurry right now.'”

Indeed, this has been a common message for Powell and his colleagues in the Federal Open Market Committee. exist Speech early this month For New York economists, Powell insists that “no rush” is needed as central bankers seek “clearer” directions for the Trump administration.

GDP, inflation, new prospects for unemployment

Therefore, the public will update its quarterly forecast for interest rates, GDP, unemployment and inflation through the Federal Reserve. According to recent data, the Fed could increase its outlook for inflation in 2025 (2.5% for core and titles in December), while lowering its GDP forecast (from 2.1%). Powell will host his usual post-conference press conference.

Regarding the rate issue, the FAP will use a “dotmap” grid of its individual members’ intentions.

There are major differences about what might happen there. The committee could maintain its two cuts outlook for December, remove one or both, or, it is impossible to add another cut as a statement of concern for a potential slowdown. Everything seemed to be on the table.

“I think this year could be a cut of one or zero, especially when tariffs continue,” North said. “I don’t think they’re going to save the economy by lowering interest rates because they know that if they have inflation, they’re going to have to go back and start over.”

Economists worry Trump tariffs Inflation could be reignited, especially if the White House becomes more aggressive after a local review of global tariffs on April 2. If the Fed is increasingly concerned about inflation imposed by tariffs, it may be less willing to cut it.

Thierry Wizman, FX and interest rate strategist at Macquarie Global, said investors are concerned about the direction the FOMC is directed.

“This concern is due to doubt that control of macroeconomic policy is no longer the ‘man in charge’,” Wizman wrote. “Given the current uncertainty and the recent increase in inflation expectations, the Fed may find it difficult to issue three more tax cuts, and even two more. It may cut one rate to 2026, with only one cut in the median “point” in mid-2025.”

The market still sees two or three cuts

If the Fed decides to stick to two cuts, it may just be “avoiding increasing recent market turmoil,” Goldman Sachs economist David Mericle said in a note.

Main stock markets Hovering around correction Territory, or 10% drop from highs.

past, The idea of ​​the Federal Reserve, The market has already expected central banks to formulate policies in response to market turmoil. According to CME Group data, traders will not expect to wait until at least June to lower their initial interest rates and price at another quarter-point easing point, with an opportunity of about 50-50 by the end of the year. FedWatch Measurement of futures pricing for Federal Reserve funds.

But that may even be too ambitious, Witzman said.

“In fact, the market seems to have become too bad about the Fed, rather than sending confidence in its confidence in its own prospects, it sends a signal of unconfidence. In other words, the FOMC meeting may have no answers, like Jay Powell’s press conference,” he said using Powell’s nickname.

The committee can also address its “quantitative tightening” program, where it allows a range of gains from mature bonds to its monthly balance sheet. The market is widely expected to end the program later this year, with a recent meeting discussing how best to handle the central bank’s $6.4 trillion Treasury and mortgage-backed securities.