2025 US Federal Reserve Meeting Key Scenarios That Will Change Market Direction
The Federal Reserve (the US central bank) is expected to announce its interest rate decision on Wednesday, May 7, 2025, at the conclusion of its meeting that began on May 6. Expectations indicate that the Fed will keep interest rates unchanged in the 4.25% to 4.50% range, despite political pressure from President Donald Trump, who is calling for a rate cut to stimulate the economy.
Possible Scenarios:
1. Hold the Interest Rate (Likely Scenario)
With the labor market stabilizing and employment increasing by 177,000 in April, along with slowing inflation, the Fed is likely to choose to wait and monitor economic developments before taking any action.
2. Cut Interest (Low Likelihood)
Despite Trump's demands, the Fed is not expected to cut interest rates at this meeting, especially given the ongoing concerns about the impact of new tariffs on inflation.
3. Hints of a Future Rate Cut
Fed Chair Jerome Powell may hint at a possible interest rate cut at the upcoming meetings during his press conference, if signs of an economic slowdown persist.
Impact of the Decision on Markets
• Financial Markets: US stock indices have seen a slight decline in recent days, as investors await the Fed's decision.
• Gold: Gold prices rose more than 2%, supported by a weaker dollar and increased demand for safe-haven assets.
• Cryptocurrencies: Digital currencies, such as Bitcoin, declined as the Fed's decision approached, due to concerns about the impact of monetary policy on risk appetite.
Future Outlook
Expectations indicate that the Fed may cut interest rates twice during the second half of 2025, if signs of an economic slowdown persist.
Conclusion
The Fed is likely to keep interest rates unchanged at its meeting tomorrow, with close monitoring of economic developments. Jerome Powell's remarks will be crucial in guiding market expectations for the coming period.
