When Will the Critical FED Interest Rate Decision Be Announced? A Communication Ban Will Start for FED Members! Here Are the Latest Predictions and Expectations

Question

The Federal Open Market Committee's (FOMC) is expected to keep short-term interest rates steady at its meeting on May 7, as policymakers are expected to act cautiously in the face of ongoing economic uncertainty and await significant data releases.

Market indicators strongly point to a pause in interest rate changes. According to the CME FedWatch Tool, fixed-income markets anticipate that the federal funds rate will remain in the current range of 4.25% to 4.5%. Prediction markets Kalshi and Polymarket reflect a similar sentiment, giving a nearly 90% probability that the FOMC will hold interest rates steady in May. However, a rate cut in June is increasingly likely.

In a speech on April 16, FED Chairman Jerome Powell signaled a patient approach, stating, "We are in a good position to wait for more clarity before considering any adjustments to our policy stance."

In a speech on April 16, FED Chairman Jerome Powell indicated a patient approach, stating, "We are in a good position to wait for more clarity before considering any adjustments to our policy stance at this time." Powell's comments mirrored those of FED member Christopher Waller, who described the new tariff policy as "one of the biggest shocks to the U.S. economy in decades."

As policymakers continue to assess economic conditions, the Fed will enter a period of pre-meeting communication interruption on April 26. Any public comments will have to be made before that date.

The decision to postpone any policy adjustments came as the appearance of mixed economic signals complicated the situation. Soft data, including consumer and business sentiment surveys, indicates that concerns about economic slowdown are increasing, while hard data has remained relatively solid. The US labor market continued to create jobs in March, and the Consumer Price Index (CPI) inflation decreased by 0.1% compared to the previous month during the same period.

Among the upcoming economic data, which includes the employment report for April to be announced on May 2 and the CPI report to be announced on May 13, will be critically important in shaping the FED's next moves. However, the economic data for May, which will be announced in June and provides a clearer picture regarding the impact of recent tariffs and global economic changes, may be more significant.

Citigroup revised its forecasts accordingly and expects the FED to make its next interest rate cut in June, a delay from the previous prediction in May, while maintaining a total outlook of 125 basis points of cuts throughout 2025.