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Highlights
- The Fed's FOMC meeting concludes tomorrow.
- Powell is less likely to cut interest rates.
- A September rate cut is more likely.
As the Federal Reserve’s two-day meeting concludes tomorrow, Chair Jerome Powell’s decision on interest rates is highly anticipated. Despite US President Donald Trump’s call for a rate cut, the Fed is likely to keep interest rates steady at 4.25-4.5%. Polymarket data supports this expectation, with high odds for no rate cut.
What to Expect As Pressure Mounts on Fed Chair for Rate Cut
The Federal Reserve has scheduled its FOMC meeting for July 29-30. With Chair Jerome Powell’s pivotal decision on interest rates pending, the crypto community is eagerly awaiting his speech on July 30. If the Fed takes a dovish stance, it could lead to a bullish trend in the crypto market, whereas a hawkish approach could adversely impact the industry.
However, experts remain doubtful about the Fed’s interest rate reduction. Though President Trump has repeatedly urged Powell to lower the rates, the central bank has maintained its target interest rate range at 4.25-4.50%. The bank has adopted a cautious “wait and see” approach until there’s more clarity on inflation trends and the economic impact of Trump’s tariffs.
“He’ll again emphasize patience,” stated Morgan Stanley Chief U.S. Economist Michael Gapen, highlighting the least possibility for a rate cut. As per Polymarket data, there is a massive 97% chance for the Fed to hold its interest rate unchanged tomorrow.
Meanwhile, Polymarket shows a 2.4% likelihood for a 25-basis-point decrease, while a 50-basis-point or more decrease is considered highly unlikely at less than 1%. Similarly, a 25-basis-point or more increase is also deemed improbable, with a probability of less than 1%.
Will Fed Continue Its ‘Wait and See’ Approach?
According to the CME Group’s FedWatch tool, investors expect a 62% probability of a rate cut in September. By that time, the Fed will have received crucial data from the July and August jobs reports, providing insight into the labor market’s strength and informing its decision on potential rate adjustments.
At the same time, some economists believe a rate cut in September might be premature, suggesting the Fed may not cut rates at all this year. Analysts expect Chair Powell to reiterate the Fed’s data-dependent approach, indicating that future decisions will be guided by incoming economic data rather than a predetermined timeline. Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, noted, “The reality remains that the performance of the real economy also has a vote.”
Interestingly, Fed Governor Chris Waller is advocating for a July rate cut, citing signs of economic weakness beneath the surface. Despite appearances of strength, he points to sluggish private-sector job growth, suggesting the economy needs support. A rate cut would lower borrowing costs for businesses and consumers, potentially preventing further economic decline.
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