US Federal Reserve likely to hold rates steady at June meeting but cuts loom

US Federal Reserve likely to hold rates steady at June meeting but cuts loom

The United States Federal Reserve will announce the outcome of a monetary policy review today, with most analysts expecting rates

federal reserve decision

Photo: VOA

The United States Federal Reserve will announce the outcome of a monetary policy review today, with most analysts expecting rates to remain steady at 2.5%.

For the first time in a long time, the Fed’s action today is not a certainty. Future pricing in the Fed funds market has been hovering around a 20% chance that the central bank will cut rates. Compared to a forecasted 1.3% of a cut last March and a 2% cut last April, 20% provides an appreciable degree of uncertainty.

However, while investors are anticipating a downward interest move in the near future, they do not expect the interest move to occur today. The timing of a rate cut depends on a number of factors, such as the interest rate forecasts made by the Fed itself in addition to macro predictions on the outlook of key US economic fundamentals such as unemployment rates and inflation.

Geopolitical considerations will be taken into account as well, such as the degree of economic uncertainty around a potential for a US-China trade deal. Indeed, economists and political analysts alike will be watching the upcoming potential meeting between Presidents Trump and Xi at the G20 Summit on June 28 and 29.

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