US Fed Meeting: All eyes are on the US Federal Reserve which will announce the outcomes of the monetary policy meeting on May 7. Ahead of the meeting, the US stock market traded with mild gains. US' 47th President Donald Trump who has taken global trade uncertainties by storm, has voiced his desire for lower interest rates end number of times. But is Fed's chair Jerome Powell in the situation to ease rates?
US Fed Expectations:
The majority of experts are predicting a third pause from FOMC in rates. European banker, ING in its note said, "Despite overt pressure from President Donald Trump and Treasury Secretary Scott Bessent to cut the policy rate, the Federal Reserve is widely expected to leave monetary policy unchanged at the 7 May FOMC meeting."
After cutting key interest rates by 100 basis points from September to December 2024, FOMC members entered the year 2025 with pauses. Fed has kept rates unchanged at 4.25-4.5% since the past two policies that were announced in January and March 2025.
In his most recent comments on 16 April, Fed Chair Jay Powell suggested that the central bank is in a "wait and see mode" despite warning that unemployment looks set to rise with the economic impact from tariffs likely to be larger than they had previously been thinking, said ING's note.
President Trump has been putting pressure on Fed for reducing rates, while increasing trade war with his relentless and mind-boggling tariffs. Trump's tariff war with China, and huge duties on foreign products have resulted in uncertain global economic growth, while US is expected to take a hit far worse than recession. However, Trump has stated that he will not remove Jerome Powell till his tenure ends in May 2026.
"It's going to be very difficult for the chair to navigate this without appearing critical of the White House," Vincent Reinhart, chief economist at BNY Investments said, ""The outlook for the economy is the outlook for the political economy, and your economic forecast depends on actions by political authorities," as reported by Bank Rate.
Expecting a pause in interest rates on May 7, Greg Mcbride, CFA, Bankrate Chief Financial Analyst said, "There's just not enough data to compel them to consider action one way or the other. That might change over the course of the next month."
US Fed Meeting Date:
The 2-days meeting of FOMC commenced from May 6, while its outcome will be announced on Wednesday, May 7.
May 7th policy announcement will be the third monetary policy of Fed for 2025.
US Fed Meeting Time:
The rates decision will be announced at 2:00 PM EST on May 7. This will be 11:30 Am of Wednesday, May 7 at Indian Standard Time (IST).
After the rates decision, Powell's press conference will follow at 2:30 p.m. ET. In IST, the time will be 12:00 Am.
Where To Watch Live Stream Of Fed Policy:
As per Federal Reserve's update, you can watch the press conference of FOMC and chair Jerome Powell at their official Youtube channel. Click On Links Below:
US Stock Market Ahead Of FOMC:
US stock market traded with mild gains on Wednesday in the early trade. Dow Jones climbed 220 points to 41,046.88, while S&P surged by 0.44% to trade at 5,631.48, and Nifty edged higher by 34.80 or 0.14% to trade at 24,414.40, at the time of writing. Dow Jones halted its two consecutive losing streak.
The sentiment was uplifted over expectation of trade talks between US-China officials to take place during this weekend in Switzerland. As per reports, the Treasury Secretary Bessent stated that the meeting will focus on de-escalation rather than securing a deal.
The Federal Reserve is widely expected to keep the federal funds rate unchanged at 4.25%-4.50% for a third consecutive meeting in May 2025, as policymakers weigh slowing inflation against a still-resilient labor market and heightened uncertainty over trade policy. The US economy contracted in Q1, with GDP shrinking at an annualized rate of 0.3%, largely due to a surge in imports as businesses and consumers rushed to stockpile goods ahead of anticipated tariff increases. While inflation indicators, such as the CPI and PCE, continue to show easing price pressures, and the labor market remains solid, many investors anticipate potential softening in the months ahead, as per Trading Economics data. Traders will closely watch the Fed's guidance for the remainder of the year, though officials are likely to maintain a cautious, data-dependent stance as they assess the full impact of the Trump administration's new trade measures. Markets are currently pricing in 25 basis point rate cuts in July, September, and October.
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