The Federal Reserve is almost certain to keep rates steady at next week’s policy meeting. This is based on the latest reports from Fed officials, analyst comments and market bets.
But what the central bank expects to do in the remaining 6 months of the year is much less certain.
June’s policy meeting will be accompanied by a “dot plot,” a summary of forecasts that visualize central bankers’ expectations for possible rate cuts in the coming months and years.
“The average score for 24 is the big question,” he wrote Michael Feroli, JP A Morgan analyst previewed the Fed’s upcoming huddle Friday. “We think it will easily show two this year, up from three at the March meeting.”
Sentiment on interest rate policy has turned more pessimistic since the last central bank policy meeting, as successive inflation and employment data show signs of an economy unfit to cut rates.
The question on many investors’ minds is how much of a cut Fed officials are predicting.
Fed hawks are expected to have a cut or no cuts at all this year, Ferroli said. Meanwhile, the Pigeons are expected to schedule two.
As for the prospect of rate hikes, which some Fed officials have nodded to, Ferroli doesn’t see it in the cards.
Fed Chairman Jerome Powell, who is often considered bad at confronting conflicting data at times, is likely to take the big picture view and stay on the news, Ferroli said. He is expected to emphasize that inflation is coming down stubbornly and that the labor market is getting better balanced on the back of solid growth.
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