The two-day Federal Open Market Committee (FOMC) meeting kicks off Tuesday, and concludes with a federal funds rate decision and Fed Chair Jerome Powell‘s press conference slated on Wednesday.
Economists broadly agree the Fed will keep interest rates unchanged. However, a growing divergence on Wall Street reveals deep uncertainty over how long that pause will last, largely driven by President Donald Trump‘s trade tariffs and their potential inflationary spillovers.
Much of the press conference is expected to focus on Powell’s response to recent pressure from Trump to lower interest rates, which had fueled fresh concerns within the financial community about the Federal Reserve’s independence.
See Also: US Trade Deficit Soars To Record $140B As Imports Rocket Ahead Of Trump’s Tariffs
Markets Fully Price In A May Hold, Yet Cuts Loom Over The Horizon
CME FedWatch Tool data — which tracks interest rate expectations via fed futures pricing – shows a 97% probability that the Fed will keep rates in the 4.25%-4.5% range in May.
Money markets are pricing in 31% odds of a 25-basis-point cut by June and 78% by July.
Overall, speculators assign a 82% chance that the Fed will deploy three rate cuts by year end.
CFTC-regulated prediction platform Kalshi shows …