Based on current market consensus, Federal Reserve policymakers are preparing to pause interest rate hikes for the first time in 15 months while maintaining a tightening bias, suggesting that rate hikes could resume as early as next month.
Powell has signaled that Fed leadership prefers to wait to assess the impact of the past 10 rate hikes on the economy and the impact of recent bank failures on credit conditions. However, with inflation still more than twice the Fed's target, the FOMC is likely to emphasize that it is leaving open the possibility of another rate hike in July or September.
June interest rate decision: Still need to be wary of "hawkish" scares
A “June surprise” is certainly still possible. While most on Wall Street think the Fed will pause at this meeting, economists at Citigroup and LH Meyer/Monetary Policy Analytics in Washington expect the Fed to raise rates in June.
Meyer stressed that Powell is focused on risk management and is wary of rising inflation and an overheated labor market. The latest CPI report released on Tuesday showed that overall inflation in the United States slowed in May, but core prices excluding food and energy continued to rise, which may worry Fed officials. Lindsey Piegza, chief economist at Stifel Nicolaus & Co., said inflation is still too high. The Fed has opened a door to pause, and not walking out of it now will cause unnecessary concerns, but they will have to send a signal that their work is not yet done.
Powell will likely be asked to explain why Fed officials have signaled that they may need to tighten monetary policy in the future, but they did not act at this meeting. "If they decide this week to pause but maintain a tightening bias, then the main paradox is: if they are so certain that further tightening will be necessary in the future, why not continue to raise rates now?"
Derek Tang of LH Meyer/Monetary Policy Analysis said. Powell will also be asked about the outlook for the July and September meetings and whether he still believes a soft landing for the U.S. economy is possible. He will also be asked to assess the impact of the March bank failures on credit. #合约锦标赛 #美联储利率决议
