What To Expect From The Federal Reserve’s Interest Rate Decision on Wednesday | Global News Avenue

In an uncertain economy, there is almost one thing guaranteed: When the Central Bank Policy Committee meets Tuesday and Wednesday, the Fed will keep its key interest rates unchanged.

Financial markets bet on the vast majority of the Fed will hold its benchmark Federal funding rate According to CME Group’s FedWatch tool, the tool ranges from 4.25% to 4.5%, the same as in January, which predicts interest rate movements based on futures trading data based on Fed funds. This will be the second consecutive meeting Federal Open Market Commission Stand up. The FOMC kept the rate unchanged in January after cutting it by a percentage point in the previous three meetings.

In a recent speech, Fed officials, including Chairman Jerome Powell, said they are accepting Waiting method Interest rates are because so many economic policies have surfaced. On the one hand, the Fed is reluctant to act until policymakers learn more about President Donald Trump’s tariff threats that he would actually impose on foreign countries and whether those tariffs would drive inflation and delay the economy, Or both.

How did we get here?

The Fed has kept its influence on interest rates for more than two years after a sharp rise in 2022 to offset a surge in inflation. Higher interest rates are to stifle inflation and slow down the economy by raising interest rates on various loans.

The central bank lowered its Fed’s funding rate late last year after inflation was closer to the Fed’s annual 2% target. But the stubborn inflation revival in recent months, coupled with a lack of economic policy to Trump, has left the Fed temporarily reluctant to take more action.

Fed Chairman Jerome Powell confirmed in a speech last week that he and his colleagues were Don’t rush to reduce the fee rate.

What’s next for the Fed’s influential interest rate?

and “Uncertainty” the order of daythe Fed may have made little moves to indicate its future in a press conference after its official statement or Powell’s announcement.

“We hope the Fed will remain stable for a second consecutive meeting and, given the increased uncertainty, provide limited guidance for the policy path ahead,” Matthew Luzzetti, chief economist at Deutsche Bank, wrote in a comment.

In addition to statements and press conferences, Fed officials will also release the quarterly forecast for its economic forecast, with FOMC members’ expectations for key economic indicators and Fed funding rates in the coming months and years, as well as pencil expectations. Deutsche Bank economists expect officials to lower the rate only one time this year, rather than the two forecasts they predicted by the FOMC’s last forecast.

One of the main open questions of the Fed is whether the economy is in danger In recession. At the beginning of the Second Trump era, some economic indicators flashed warning signs. In addition to making policy makers nervous, Consumer confidence plummetedand American families Reduce expenditure. on the other hand, The job market has remained solidand Inflation drops rapidly In February.

Among those crossover storms, some forecasters increased the chances of a 2025 recession, although it remains relatively unlikely. For example, Goldman Sachs economists raise the chances of a recession next year from 15% to 20%.

Given the central bank’s mandate to retain full employment and maintain inflation, the economic downturn will lower interest rates to the Federal Reserve to boost the economy.

However, forecasters believe tariffs will drive the risk of inflation by pushing higher prices of consumer goods, which will push the Fed in the opposite direction to keep interest rates high.

As of Friday, financial markets bet that the Fed will lower interest rates again in June.