Hoping for lower borrowing costs? Fed likely to stand pat again
WASHINGTON — The inflation-fighters at the Federal Reserve are expected to keep their key interest rate unchanged Wednesday for the fourth straight time . That's likely to shift attention to how many interest rate cuts they forecast for this year.
It's widely expected that the 19 Fed officials that participate in the central bank's interest-rate decisions will project two rate cuts for this year, as they did in December and March . But some economists expect that one or both of those cuts could be pushed back to 2026.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNBC
28 minutes ago
- CNBC
Evercore ISI's Krishna Guha: The Fed will be in 'wait and see mode' today
Krishna Guha, Evercore ISI vice chair, joins CNBC's 'Squawk on the Street' to discuss expectation for the Federal Reserve's rate decision, whether there is risk that the Fed may be too late in cutting rates, and more.
Miami Herald
36 minutes ago
- Miami Herald
Stock Market Today: Waiting on the Fed
Happy Fed Day! Will they or won't they? Actually, that's not really the question. The market is pricing in almost a 0% chance that the Federal Reserve moves on interest rates today. So, any move will be a huge surprise. The real question is what will the Fed say? About future moves, that is. Look for a statement from the Fed around 2 p.m. U.S. EDT today and a news conference with Chairman Jerome Powell 30 minutes morning's economic reports include initial jobless claims and housing starts. Jobless claims dropped to 245,000 for the week of June 14, below expectations of 251,000. While the beat is good, this is near the highest levels of the year and indicates a cooling job market. Housing starts were also below expectations, which in this case is not good. Starts were 1.26 million vs. a forecast of 1.36 million. Housing remains unaffordable for many Americans. So, how are markets reacting? Honestly, I think they're paying more attention to the Middle East and waiting for the Fed. Speaking of the Middle East, Iran's Ayatollah Ali Khamenei has said that he will not surrender to Israel. So, investors should not expect a quick end to this conflict. Futures are modestly higher this morning. S&P 500 futures are up 0.12%, while the tech-heavy Nasdaq is 0.2% higher. Bonds are rallying, too, although well off their highs of the day. The U.S. 10-year treasury note is up 0.04% and is priced to yield 4.38%. Crude oil continues tomarch higher on Middle East tensions. ThinkOrSwim Thought of the day: It's the reaction to news that matters. And when expected relationships change, it's important to understand why and what that means. Here, Timmer shows that typical "risk off" reactions to news have changed. The U.S. is looking less like the safe haven it has always been for investors. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Forbes
41 minutes ago
- Forbes
Here's Why The Fed Likely Won't Cut Rates—Even As Trump Attacks Powell
President Donald Trump escalated his aggressive push for interest rate cuts Wednesday as the Federal Reserve held its meeting on the matter, and all evidence suggests it's highly unlikely this week will produce the rate cuts the Oval Office desires, though it will reveal how the top U.S. monetary policymakers are approaching the U.S. economy as tariffs play out. Federal Reserve Chair Jerome Powell will take center stage again this week. In his latest attack on the Fed and its top-ranking official Jerome Powell, Trump derided Powell as a 'stupid person' because he 'probably won't cut today.' The name calling came just before the Fed says at 2 p.m. EDT Wednesday whether it decided to change interest rates, to be followed by Powell's press conference. The decision will follow Tuesday and Wednesday's regularly scheduled meeting of the Federal Open Markets Committee, the 12-person committee that most crucially sets the target federal funds rate baseline for borrowing throughout the U.S. economy. Wall Street considers it a near certainty the Fed will opt to keep rates at the 4.25% to 4.5% range they've stood since December. The CME Group's FedWatch Tool indicates markets price in just 0.1% odds of a cut this week – despite Trump's repeated demands for the Fed to slash rates by a full percentage point. Recent economic data seems to satisfy the normal rate cut preconditions of steady inflation and a weakening labor market, but the Fed has been hesitant to take action as it normally may, citing the uncertain impact of Trump's tariffs. To that end, Goldman Sachs economists expect inflation to rise from its most recent 2.5% to 3.3% by December, according to the Fed's preferred inflation measure of core personal consumption expenditures. Goldman expects the dot plot to also reveal the Fed expects to see higher unemployment (four-year high of 4.5%) and lower economic growth (1.3% real gross domestic product growth), though the investment bank does expect the Fed to stand by its projection of two 2025 cuts. Wednesday marked the latest in a long string of attacks on Powell. The monetary policy chief has been among the most frequent targets of Trump's ire during the first five months of his second presidential term. Trump has repeatedly gone after the central banker as the Fed declines to cut rates to Trump's liking. Trump called Powell a 'numbskull' last week, and has frequently teased the possibility of firing Powell before his term expires next May. Beyond any potential fireworks from Powell amid the Trump barrage directed at him, the most critical update from this week's Fed conclave will be the release of its quarterly summary of economic projections, or dot plot. That will reveal where Fed staff expect several key economic data points to head in the near future, notably indicating the median expectation for rate cuts from the policymakers who vote on conducting them. The March dot plot indicated the Fed's baseline forecast was for two 25 basis-point cuts this year, but this month's update will reveal just one expected cut in 2025, according to Bank of America forecasts. Fed meetings often bring significant movements in stock prices, and the stakes are set this week for a potential move. Generally, stocks tend to rise when the Fed indicates rates will go lower and fall on the reverse, as public companies fetch higher valuations on stronger profit margins from lower borrowing costs and stocks becoming more attractive for investors as fixed income returns shrink. If the Fed adjusts its dot plot to indicate just one 2025 cut, that would cause a noticeable selloff in stocks, according to Sevens Report founder Tom Essaye, predicting a roughly 1% drop for the S&P 500 benchmark index. Should the Fed maintain its median forecast of two cuts, Essaye said he expects a mild rally, though that could expand into a sizable gain if Powell shows openness to lowering rates at the July meeting. The FedWatch Tool shows just a 13% chance of a cut at the July 29-30 summit.
