The Fed is likely to keep the target range for the federal funds rate unchanged at 4.25-4.50% this week, Rabobank’s Senior US Strategist Philip Marey notes.
“We expect Powell to stress that the FOMC is data-dependent and cautious about further cuts, while dodging questions about the impact of Trump’s policies on the Fed’s rate path.”
“The FOMC and the Fed staff are struggling to incorporate the policies of the new administration in their forecasts, but once Trump’s policies have been fully incorporated in the projections, we expect the rationale for a second rate cut this year to fade.”
“While the Fed and the markets still expect two rate cuts this year, we think that the likely inflationary impact of tariffs and increased border security will cause a pause in the cutting cycle after one final hike in the coming months.”
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