Inflation, tariffs and economic growth are expected to control post-meeting press conferences.
The Federal Reserve began its two-day March policy meeting on March 18th.
After cutting interest rates in full from September 2024, the US Central Bank suspended its easing cycle in January amid revival of inflation and policy uncertainty. Federal Reserve Chairman Jerome Powell informed him that he and his colleagues were not in a hurry to lower interest rates.
Of course, since the facility last met in January, it has caused much from rising fears of the recession to turmoil in the US stock market.
Can the Fed immediately telegraph policy responses?
Here are some things to look forward to at the end of this month’s Federal Open Market Committee (FOMC) meeting:
Waiting approach persists
In the case of financial markets, the conclusion of this month’s gathering is simple. The US Central Bank will leave monetary policy as is.
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“The Federal Reserve remains firmly planted on the sidelines at this week’s meeting,” Bankrate Chief Financial Analyst Greg McBride said in a statement in the Epoch Times. “Duty inflation and recent economic uncertainty will drive them increasingly data dependence in the coming weeks and months.”
The futures market does not expect a next quarterly point rate cut until its June meeting.
The chorus of Fed officials shows they are happy to hold interest rates longer.
Kansas City Fed President Jeffrey Schmidt appeared before a USDA event later last month, saying he “want to make any changes” by further reducing the restraint.
Recent consumer surveys have highlighted balloon expectations, but it could be a noise rather than a signal for the economic path ahead.
“It can be argued that some of the factors that raise inflation expectations are likely to be one-off, temporary development, but again given recent experience, I have no intention of taking the opportunity when it comes to maintaining the Fed’s reliability in inflation.”
Post Meeting Press Conference
Over the past few years, US stocks have been circling during Powell’s post-meeting press conference.
“The press conference you should follow may be a must-see television,” said Jay Woods, chief global strategist at Freedom Capital Market, in a memo sent by email to the Epoch Times.
Powell could face problems surrounding inflation, tariffs and growth outlook. If his recent public appearances are anything, the central bank chief could have expressed that the Fed would not take action until the data confirms further progress in achieving the institution’s 2% inflation target.
Comments by Federal Reserve Chair Jerome Powell will appear on November 7, 2024 at the New York Stock Exchange’s floor bank. Richard Drew/AP Photo
The recent inflation report could ease the Federal Reserve following rising price pressures from September to January 2024.
Early estimates from the main inflation report for next month suggest further escape trajectories.
“Speaker Powell should face a barrage of questions about future cuts. Given the softening data on CPI and PPI last week against the backdrop of potential tariff impacts and rising unemployment rates, it will be interesting to see what the focus of Powell and the committee is,” Woods said.
Reporters can flood Powell with questions about President Donald Trump’s immigration and trade policy adjustments and impact on the economy and labor market.
Powell refrained from explicitly discussing changes in the new administration, but he spoke more broadly about subjects such as tariffs.
“What is important for the economic and monetary policy pathway is the net effect of these policy changes,” Powell said in his prepared remarks. “There have been recent developments in some of these areas (particularly trade policy), but there is uncertainty about change and as we analyze the impact, it remains likely to have an effect. It focuses on separating signals from noise.”
Powell reiterated that the Fed can afford to endure because of the good economic and monetary policy.
Can the Fed quickly turn policy stances in a rapidly changing economic situation? One study may indicate where institutions think the economy is heading.
Economic forecast overview
Updates to the Economic Forecast Summary (SEP), a quarterly survey of future monetary policy and broader economic conditions, are published.
Economic forecasts have changed significantly since the start of the year, with economists discussing the recession and higher odds for stags. This is an environment of rising inflation, growth in anemia, and unemployment.
Wall Street panicked both possible scenarios, particularly after the Atlanta Fed’s GDPNOW model suggested a sharp first quarter contraction. The regional central bank later revealed that gold imports had driven a sharp decline in GDP outlook from January to March.
Still, traders’ concerns were not countered when Trump refused to rule out a recession, or when Treasury Secretary Scott Bescent told NBC’s “Meeting” on March 16th.
Comerica Bank chief economist Bill Adams said “layoff headlines, stock market declines, tariff horror Claxon” could exacerbate consumer confidence and bring consequences for the broader economy.
“Private backs with confidence are becoming a real threat to consumer spending, which is often repeated two-thirds of US economic activity,” Adams said in an emailed note to the Epoch Times.
“The downsides to the economic outlook have increased significantly last month.”
For now, Deutsche Bank’s US economist Matthew Lutzetti said that SEP data will maintain forecasts for the median two interest rate cuts in 2025.
The Fed dot plot is a visual aid to communicate central bank interest rate forecasts. Each dot in the chart highlights an individual’s forecast of interest rates at the end of a particular year.
Nevertheless, if Comerica’s chief economist adds, the Federal Reserve is unlikely to “ride the rescue” if economic activity is hit while economic activity is surged.
