The case for the Fed holding interest rates at June meeting
Federal Reserve officials will be convening in Washington, D.C, next week for their June FOMC meeting, starting on Tuesday and concluding on Wednesday with a press conference with US central bank's Chair Jerome Powell.
Yahoo Finance senior reporter Allie Canal explains how investors will be listening closely for whether the Fed will cut interest rates at this meeting. Inflation and the lasting price pressures from President Trump's tariffs continue to weigh on consumers.
Also watch Yahoo Finance's Jennifer Schonberger outline what to expect from next week's Fed meeting and the Trump administration's commentary around the central bank.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
The Federal Reserve is expected to hold rates steady at next week's policy meeting, although nearly 70% of investors now believe cuts could come by September, and some are even betting on July. Still, uncertainty remains, especially around the scope of President Trump's tariffs, which continue to ripple through markets. Some duties have been paused, but many remain in place, and we still don't have a firm deal with China, which is one of our largest trading partners. All of that complicates the Fed's outlook, and we did have the chance to speak about this with Wall Street watchers this week, including a former Fed president. Take a listen.
The high level of uncertainty still is with us. And that, I think, is why the Fed is on hold until some of that, we get a little more clarity about not only the magnitude of the tariffs and the breadth of the tariffs, but what effect they'll have on inflation and what effect the tariffs and other policies, including the, the budget bill, will have on growth and employment.
The Fed is going to stay on the sidelines, which means we're kind of in this wait and see time period, and that's where I don't think the Fed likely cuts until September, unless you see significant weakening in the labor market. And then the question is always, is it too late or not?
The benign version of rate cuts, I think, will take time to develop because the Fed will want to have confidence that, number one, prices aren't rising in a kind of uncontrolled fashion, and at the same time, you know, the Fed will be monitoring the activity signals in the economy as well.
So, for now, the general consensus is that the Fed is staying cautious, encouraged by the data, but waiting for clearer signs before making any significant moves. And we'll be watching closely for what comes out of the updated dot plot as well, which will give us more of a sense into how the central bank is thinking about future interest rate cuts.