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Fed Signals Patience on Rate Cuts as Markets Adjust Expectations

Chair Powell emphasizes uncertainty over tariffs and resilient job data, pushing likely rate cuts to July or later.

The Federal Reserve building is seen in Washington, U.S., January 26, 2022. REUTERS/Joshua Roberts/File Photo
U.S. Federal Reserve Governor Adriana Kugler poses for a picture during the 2024 Stanford Institute for Economic Policy Research Economic Summit in Palo Alto, California, U.S., March 1, 2024. REUTERS/Ann Saphir/File Photo
Gasoline prices have fallen recently on weaker global oil demand.
Flowers grow outside the Bank of England in the City of London, Britain, July 30, 2023. REUTERS/Hollie Adams/File Photo

Overview

  • Federal Reserve Chair Jerome Powell reiterated a cautious approach to interest rate cuts, citing ongoing uncertainty over tariffs and economic conditions.
  • Markets now anticipate the first rate cut of 2025 to occur in July or September, rather than June, with projections ranging from one to four cuts by year-end.
  • April jobs data showed continued strength in hiring, reducing the urgency for immediate monetary easing despite inflation risks tied to tariffs.
  • The Federal Open Market Committee's next scheduled meeting on June 18 is expected to provide updated economic projections but is unlikely to announce a rate cut.
  • Policymakers remain focused on assessing the impact of US-China trade negotiations and tariffs on inflation and employment before adjusting monetary policy.