Markets in suspense: the Fed makes key decision on rates with Donald Trump and inflation in the radar

The Federal Reserve (Fed) is found in the Center for the attention of global markets. After starting your two -day meeting, will define this Wednesday what will you do with the rates, currently in a range of 4.25% to 4.50%.

The market anticipates that they will remain unchanged, however, the looks are put in the Signs that the president of the FED, Jerome Powell, can offer, regarding the future direction of monetary policy in the midst of an economic panorama full of uncertainty.

According to the Fed Watch Tool of the CME, the market assigns a 99% probability that the monetary policy rate does not suffer modifications at the FOMC meeting. “In our opinion, the market will be expectant to the decision that the FOMC can take regarding the management of the balance sheet and the update of the SEP (Summary of Economic Projections),” they said from IEB Group.

A context of economic uncertainty

The US economy has been showing mixed signs in recent months. While the labor market remains robust, with an unemployment rate close to historical minimums, other indicators, such as the consumer confidence and certain manufacturing sectors, began to reflect caution. In addition, the recent implementation of tariffs by the Trump administration added greater uncertainty, generating concerns about possible regrowths in inflation and a slowdown in economic growth.

“Economic data in the United States have been revealing an uncomfortable turbulence in recent weeks, affected by President Trump’s policies and taking the market to wonder if these policies could lead to a slowdown in progress. To this is added an initiative, known as the“ Mar-A-Lago Agreement ”, which would imply a pact to make changes in the international monetary system (as happened with the place of place of 1985) cause a weakening of the dollar that helps close the commercial and fiscal deficits of the United States “, highlighted a report from Balanz

However, “we see that forward the pressures on the dollar would remain until the tariff and fiscal policy ceases to be erratic and uncertainty falls, that is, until economic surprises cease to be negative,” they added.

Market expectations and economic projections

Analysts from various financial institutions, such as Barclays, anticipate that Fed could implement Two rates cuts this year, one in June and one in September, in response to a weaker labor market and commercial uncertainty. However, for the current meeting, the general expectation is that the Fed will keep the rates without changes, adopting a Posture “wait and see” before making additional adjustments.

During this meeting, the Fed will also present its “Summary of Economic Projections”, which includes the “Dot Plot”a tool that shows the expectations of the members of the Federal Open Market Committee (FOMC) on the future trajectory of interest rates.

Although significant changes in these projections are not expected, investors will be attentive to any indication about the future direction of monetary policy.

The challenge of the Fed: balance inflation and growth

The Fed faces the challenge of balance its dual mandate: promote maximum employment and maintain price stability. The recent implementation of tariffs could exert upward pressure on inflation, while economic uncertainty could stop growth.

This delicate balance will require that the FED cautiously manages its next monetary policy decisions, carefully evaluating the incoming data and general economic conditions.

This week’s Fed meeting is crucial for financial markets and global economy. Although immediate changes in interest rates are not expected, Jerome Powell’s statements and economic projections will provide a clearer vision of how Fed plans to navigate an economic environment full of challenges and uncertainties.