The Fed's Predictions on Interest Rates
The U.S. Federal Reserve is widely expected to keep its benchmark interest rate unchanged at 4.25%–4.50% during its July policy meeting, marking the fifth straight hold since a 25-basis-point cut in December. Market participants are focused on the Fed’s guidance for potential easing later this year.
According to the CME FedWatch tool, there is nearly no chance of a rate cut in July, but a 64% probability of a 25 bps cut in September. This sets the stage for potential two-way volatility in the U.S. dollar depending on the tone of the Fed’s statement and Chair Jerome Powell’s press conference.
The updated Summary of Economic Projections shows a divided outlook: while most policymakers expect two rate cuts in 2025, others foresee no cuts, one, or even up to three. The divergence reflects uncertainty about inflation and economic momentum.
Fed Governors Christopher Waller and Michelle Bowman have both signaled openness to cutting rates as early as July, citing controlled inflation. Meanwhile, President Donald Trump has renewed his public push for a rate cut, saying it would help boost the U.S. economy. Still, analysts expect the Fed to remain cautious and data-dependent, with Powell likely to emphasize flexibility ahead of the September decision.
Source: Newsmaker.id
