Most economists believe an interest rate cut won’t come from the Federal Reserve’s latest meeting.
Key Facts
Economists have placed 96% odds the Fed holds interest rates after the Federal Open Market Committee meeting ends Wednesday, according to FactSet, as the agency has maintained rates in a range of 4.25% to 4.5% since December 2024.
Morgan Stanley wrote in a note last week suggesting Fed Chair Jerome Powell will “emphasize patience” in a decision to not lower interest rates and point to “considerable uncertainty” that Trump’s tariffs will disrupt the economic outlook.
Bank of America indicated in a note that Powell would be in “no hurry” to cut rates in June, though disagreements among Fed staff “may start a trend of more frequent dissents” and a “more divided Fed may raise risks of a less consensus and more contentious institution.”
Fed governors Michelle Bowman and Christopher Waller have signaled support for easing interest rates, as Waller said earlier this month, “With inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates.”
Bowman said last week that “should inflation pressures remain contained,” she would “support lowering the policy rate” as soon as the Fed’s meeting this month.Surprising Fact
If Bowman and Waller cast dissenting votes, it would be the first double dissent by Fed board members since 1993.
