Fed reserves interest rate consistency for the third consecutive datum.
Let's talk about the latest economical hurrah!
According to the Federal Reserve (Fed), these days, uncertainty about the economic future has escalated sky-high thanks to the pesky tariffs on imports that the White House administration has been slapping on like a bully in a playground. According to the mood-maestro regulators, the chances of joblessness increasing and inflation skyrocketing have spiked upwards. The recent dashboard readings indicate that the unemployment rate has managed to remain lowish in the past few months, but labor market conditions stay stable, even if a hint of inflation rears its ugly head every now and then.
Post the huddle, Fed Chair Jerome Powell (JP) made it abundantly clear that he won't be rushed into plunging rates just yet. He needs more clarity on trade policy's trajectory, which the White House should answer up soon.
Old Man Trump, sitting pretty in the Oval Office, has been publicly bothering JP to bring down the rates since April, even tweeting he's a "bonehead" and demanding an immediate plunge.
The rate has been stationed at 4.25-4.5% since 2014's winter solstice. The Fed's latest stance coincides with market expectations, with a 97% chance of the rate staying put, according to CME's FedWatch gizmo.
Reuters pointed out that this May meeting was the last one with a clear-cut outcome. But, they also reported that most economists predict the Fed to loosen the reins on rates in 2025. The next Fed meeting on rates will pop up on June 17-18. Nevertheless, most economists and investors don't reckon the Fed will cut the rates during their next powwow in June, according to Bloomberg.
Now, if you're curious about what might happen after June, economists and investors are mulling over the option of a rate cut, but ain't have concrete plans yet. Some Fed officials hinted that a rate cut's possible if there's some rock-solid evidence of the economy plunging by June[3]. The markets are optimistic about a rate reduction in the near future but ain't certain about June's gathering[4]. The Fed is currently juggling its two duties of achieving full employment and inflation control, with a little inflation still hanging on[2]. Whether or not the Fed decides to slash the rates depends on incoming data and changing economic forecasts. As it stands now, economists and investors are anticipating potential rate reductions later in the year, but they're still a bit hazy on the exact timeline[4].
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The uncertain economic future discussed earlier is significantly impacting both the finance and business sectors, with the Fed's potential interest rate cut expected to alleviate joblessness and control inflation. Despite a 97% chance of the rate staying put as per CME's FedWatch gizmo, the markets are optimistic about a rate reduction in the near future, and some economists are speculating a rate cut if there's evidence of the economy plunging by June.
