Hell, Let's Chat About the Fed's Upcoming Move!
Federal Reserve Likely to Maintain Current Policy, Despite Intense Political Encouragement for Changes
Next week, the Fed gathers for their May FOMC meeting, and it's a surefire bet that they ain't gonna touch the Federal Funds rate—it's currently chillin' in the 4.25-4.50% zone, and folks are predicting it'll stay put.
Why no change? Well, check out the Federal Funds futures. They're screamin' loud and clear that the odds of no adjustment during the May 6-7 meeting are through the roof.
Now, when we talk about future moves, markets got their eyes on three possible rate cuts by December 2025, amounting to a quarter of a percentage point each time. The first one's rumored to come down during the June 17-18 meeting.
Look at the FOMC’s March projections; they're expecting the median federal funds rate to be around 3.9% by the end of '25 (with a range of 3.9-4.4%), implying about half a percentage point of cuts might happen. But futures markets—they're more daring—expect a slightly more aggressive easing.
So what's drivin' this? Inflation's still hangin' around at a sizzlin' 2.3% YoY in March '25, which is above the target but within forecasts. Employment's fine too, with an unemployment rate of 4.2%. Add to that some policy uncertainty from trade and fiscal policies, and the Fed's keepin' a close eye on the data.
Here's a quick glimpse of where we stand:
| Current (May) | Year-End 2025 Projection ||---------------|--------------------------|| Fed Target Range | 4.25-4.50% || Futures Implied Rate | ~3.50-3.75% (market expectation) |
Note: The Fed's projections reflect March FOMC dot plot; futures pricing is as of May 4.
- Investors are anticipating that the Federal Reserve (FOMC) may implement three quarter-point interest rate cuts by the end of December 2025, according to the current futures market trends.
- During the upcoming May 6-7 FOMC meeting, the federal funds rate is not expected to change, as indicated by the steep increase in the odds of no adjustment in the Federal Funds futures.
- For the end of 2025, according to the FOMC's March projections, the median federal funds rate is expected to be around 3.9%, with a range of 3.9-4.4%, implying about half a percentage point of cuts might happen.
- Despite the current federal funds rate remaining at 4.25-4.50%, stakeholders are closely monitoring the economic situation, including inflation, employment, policy uncertainties from trade and fiscal policies, and the Fed's ongoing evaluation of the data, in order to determine future moves in the finance and investing business.
