The FED will announce its final interest rate decision at 22:00 today, and Chairman Jerome Powell will give a speech shortly after the decision.
As markets eagerly await the outcome, experts including Mark Zandi, chief economist at Moody's Analytics, predict Powell will advocate a more cautious approach to future interest rate adjustments.
Bond traders tracked by the CME are largely expecting a rate cut, and Zandi acknowledged that such a move is possible. But he expects Powell’s tone at the press conference to reflect a change in strategy. “I think Powell will argue that the Fed should go much slower in cutting rates going forward, and even lay the groundwork for a potential pause,” Zandi said.
This caution stems from ongoing uncertainties, including fiscal policy, tariffs and economic policy changes under the current administration. The Fed may need more clarity on these factors before deciding on further rate cuts, Zandi said.
According to a CNBC poll, nearly 90% of market participants polled expect the Fed to cut rates, while only 60% believe it should. Some policymakers within the Fed have also expressed reservations about further rate cuts. Kansas City Fed President Esther George and Boston Fed President Eric Rosengren have both voiced opposition to further easing, while Powell himself has previously signaled caution.
