Aggressive tariffs on imported goods are blaming consumers’ confidence, in which homes are bracing for a potential spike and weak job market in consumer prices. However, the latest data shows reducing inflation in March, while the unemployment rate remained stable in April.
Fed officials emphasized in the latest public comments that when uncertainty is unusually high, monetary policy is in a good place to balance their goals to promote maximum employment and stable prices.
“Strict data is still catching,” said Wales Fargo’s senior US Economist Sarah House. “I think we will also hear that uncertainty in this atmosphere is high, and they are ready to act or work as needed to try and meet both sides of their command.”
Living events
The Fed’s decision will be announced in Washington at 2pm on Wednesday. Chair Jerome Powell will hold a post-meeting press conference after 30 minutes. Investors will listen closely to whether Powell repeats, as it often has, “no hurry” to adjust the rates.
Prices in futures markets are currently reducing the quarter-point rate for the Fed July 29-30 meeting and two or three by the end of the year. Economists surveyed by Bloomberg expect only two cuts beginning in September.
Statement
In a statement after their meeting, officials keep their benchmark rate in the range of 25.925%-4.5%, and in their March 19 statement repeats say that they are attentive to the risks on both sides of their dual command.
Some small language changes may appear in the first paragraph of a statement describing economic conditions. In the first quarter’s total domestic production, the import based compression committee will prevent repeating that the overall economic activity “expands at a solid pace.”
“We expect Powell to push against market prices and signal a new priority on price stability. Officials like Richmond Fed President Thomas Barkin and Fed Governor Adriana Kugler have expressed concern that inflation may be loose and a bit of pressure.”
Nevertheless, Fed officials may again point to the “concrete” labor market signals to justify their waiting and view mode, after the April’s payroll exceeded the expectations and relieved 2.5%on unemployment.
Policy also repeats that the uncertainty around their economic outlook has increased or increased.
Press conference
There is no new set of changes to the statement of the statement and the economic estimates in this meeting, investors will turn to Powell’s press conference for the keys to their desire to consider rate cuts and in which situations.
KPMG Chief Economist Diane Swank emphasized that the rise in epidemic prices and inflation lessons of the 1970s are “involved in the DNA of the Fed”, and therefore policy makers respond to tariffs.
Indeed, Powell has said in recent weeks-and can repeat Wednesday-that the Central Bank “must ensure that a one-time increase in price level has not become an inflation problem.”
In the midst of big supply shocks, “you don’t want to be too fast, or you can make a more harmful turn of stability, and it is certainly something that they do not want to work hard for inflation on the layers they are today.”
The favorite gauge of inflation under the Fed fell to 2.6% by March, which is below the peak of 5.6% from the peak of 2022 but still above the 2% target of the Central Bank.
Political fire
Powell faced questions about regular pressure and personal humiliation by President Donald Trump, and possibly the President threatened to make him a fire. Trump later retreated, repeated in an interview tapped last week and broadcast on Sunday that he had no intention of trying to fired the chair.
However, he referred to Powell in April, “Major Hari” on the barbar on the barbar on the reluctance to reduce the rates of the Fed Chief.
Powell will probably avoid any reaction to the President’s reaction and emphasize the freedom of the Fed from elected officials in the idea of monetary policy.
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