With Federal Reserve officials signaling an extended hold on interest rates, investors and economists will look to Chair Jerome Powell this week for clues on what might eventually prompt the central bank to make a move, and when.
A fourth straight meeting without a cut could provoke another tirade from President Donald Trump. But policymakers have been clear: Before they can make a move they need the White House to resolve the big question marks around tariffs, immigration and taxes. Israel’s attacks on Iranian nuclear sites have also introduced another element of uncertainty for the global economy.
At the same time, the generally healthy, if slowly cooling, US economy has few expecting a rate move any time soon. Investors are betting the central bank won’t lower borrowing costs until September at the earliest, according to pricing in futures contracts.
“The safest path to take in that situation, when there is no urgency to cut rates right now, is to just sit on your hands,” said Seema Shah, chief global strategist at Principal Asset Management.
Policymakers gather June 17-18. They’ll release a statement at 2:00 PM Washington time, and Powell is scheduled to take questions from reporters 30 minutes later.
Difficult Choices
The president’s tariffs are widely expected to raise prices and slow growth, risks that officials flagged in their last post-meeting statement. That could eventually force the Fed to make a difficult choice as the economy pulls them in opposite directions.
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