Analysts' Predictions for the FOMC Meeting "tonight"
Ahead of the release of the FOMC minutes tonight (WIB), many analysts believe the Fed is increasingly open to lowering interest rates. The minutes are likely to remain cautious and emphasize that the decision will be data-dependent.
Internally, some members are pushing for a faster rate cut. The market itself sees a strong chance of a 25 bps cut in September. However, the Fed is still weighing inflation risks.
Benign CPI data supports a cut, but rising PPI and tariff concerns could restrain aggressive action. Therefore, the tone of the minutes is likely to be balanced.
After the minutes, attention shifts to Jerome Powell's speech at Jackson Hole (August 22nd US time). This speech could lock in direction ahead of the September 16-17th meeting.
Short-term market impact: If the minutes are neutral, the USD and yields tend to be stable and gold sideways. If hawkish, the USD rises and gold is under pressure. If dovish, the USD weakens and gold is supported.
Research house & major bank views:
- J.P. Morgan Chase & Co. Morgan: Moves forward projection of a 25 bps cut to September, then several more cuts thereafter, citing labor market weakness and political uncertainty.
Reuters
- Nomura: Views September cut as baseline; market has already priced in a total of ~60 bps of cuts this year and a >90% chance of a 25 bps cut according to LSEG/CME.
Reuters
- Goldman Sachs: Goldman Sachs assesses the Fed will begin cutting rates in September and a total of three times in 2025 (25 bps each), then two more times in 2026. This projection places the terminal rate at 3.0%–3.25%.
Key points:
- The probability of a 25 bps cut in September remains high.
- The tone of the minutes is expected to be data-dependent and balanced.
- CPI supports a cut; PPI & tariffs are holding back.
- Powell's speech at Jackson Hole could clarify policy direction. (ayu)
Source: Newsmaker.id
