FOMC to leave rates unchanged this week; may lay groundwork for September cut
Federal Reserve officials are widely expected to hold rates steady on Wednesday but are anticipated to signal that the first 25 basis point rate cut could come at the next meeting in September.
“We believe Powell will wait until Jackson Hole end August – by which time the Fed will have another month’s data – to deliver the explicit September cut signal,” strategists added. Moreover, strategists said there could also be a potential change to the third paragraph of FOMC’s recent statement, which indicates that the Committee does not expect to cut rates until it has greater confidence that inflation is moving sustainably towards 2%.
A quicker increase in the unemployment rate, for instance, reaching 4.3% or higher by August, could lead the Fed to signal continued cuts in November or even consider a 50 basis point rate cut, economists noted.
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