Washington, D.C. — The U.S. Federal Reserve is expected to keep interest rates unchanged following its policy meeting this Wednesday, marking the third consecutive time the central bank has held steady amid mounting concerns over slowing economic growth and trade policy uncertainty linked to former President Donald Trump’s tariff proposals.
Markets widely anticipate that the Federal Open Market Committee (FOMC) will maintain the benchmark rate within the current range of 4.25% to 4.5%, a level set during its last rate cut in December. According to the CME FedWatch Tool, investors see virtually no chance of a rate move in May, though a 30% probability remains for a possible 25-basis-point cut in June.
All eyes will be on Fed Chairman Jerome Powell as he delivers a post-meeting press conference, where any shift in tone or outlook could trigger significant market movements. Powell is expected to address both inflation concerns and potential impacts from trade-related economic uncertainty.
Ahead of the Fed’s communications blackout period, policymakers signaled caution. Minneapolis Fed President Neel Kashkari noted that some companies are already bracing for job cuts amid trade uncertainty. Fed Governor Christopher Waller echoed similar concerns, suggesting that rising unemployment could eventually prompt the Fed to ease policy further.
Despite these warnings, April’s labor market data showed resilience. The U.S. economy added 177,000 jobs—well above expectations—while the unemployment rate held steady at 4.2%. These figures have tempered expectations for an immediate rate reduction.
Analysts at Danske Bank anticipate no policy changes in May but suggest rate cuts could resume as early as June. “Growth risks remain tilted to the downside, but rising inflation expectations are still a concern,” they noted, adding that Powell may avoid making firm commitments on future policy amid ongoing tariff uncertainty.
The FOMC’s press conference, known for its potential to stir markets, will begin shortly after the policy statement is released. Powell will first deliver prepared remarks before fielding questions from reporters in a session that frequently offers unscripted insights into the Fed’s thinking.