With the Federal Reserve widely expected to hold rates steady at 4.25%-4.50%, traders are closely watching Fed Chair Jerome Powell’s post-meeting remarks for any indication of future policy direction.
At 12:10 GMT, XAG/USD is trading $30.46, up $0.06 or +0.20%.
Trump’s Economic Policies Add Market Uncertainty
This marks the first Fed meeting since President Donald Trump’s second term began, and his administration has already signaled a push for lower interest rates. However, the Fed is expected to resist immediate policy changes, given ongoing inflation concerns and economic uncertainty.
Former Dallas Fed President Robert Kaplan noted that while Trump wants the Fed to accelerate its decision-making process, policymakers are likely to hold firm until they have more clarity on the administration’s proposed tariffs, regulatory shifts, and immigration policies. While some of these measures could be disinflationary, others—such as tariffs and labor shortages—could add upward pressure on prices.
Esther George, former Kansas City Fed President, reinforced that the central bank must focus on its mandate of price stability, rather than political influence. This sets up a potential conflict between the White House’s push for rate cuts and the Fed’s cautious approach.
Market Awaits Powell’s Signals on Future Rate Cuts
While traders see little chance of an immediate rate cut, the Fed’s statement and Powell’s press conference will be key drivers of market sentiment. Investors are particularly focused on whether the Fed acknowledges any economic slowdown that could justify easing later in the year.