The Federal Open Market Committee (FOMC) is widely expected to keep the benchmark federal funds rate at its current range of 4.25% to 4.5%, marking the second consecutive meeting with no adjustments. Fed Chair Jerome Powell has consistently emphasized a patient approach, suggesting the central bank will wait for clearer economic data before making any changes.
Inflation concerns and revised projections
The meeting includes the release of the Summary of Economic Projections (SEP), which updates forecasts for GDP, inflation, and unemployment. Analysts expect the 2025 inflation outlook to be revised upward from 2.5% to 2.8%, reflecting persistent price pressures. Meanwhile, GDP growth projections could be trimmed from 2.1% to 1.8%, signaling concerns about economic slowing.
Markets betting on cuts, but the Fed may hesitate
Investors remain hopeful for rate cuts, with CME Group’s FedWatch tool showing that traders expect at least two rate reductions this year, with a 50% chance of a third by December. However, Fed officials have shown little urgency in cutting rates, especially as inflation remains above target and uncertainty over tariffs looms.
The Fed’s decision will be announced at 2:00 p.m. ET on Wednesday, followed by Powell’s press conference at 2:30 p.m. ET.
