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Stocks Slip But Notch Weekly Gains After Jobs Report Beats Expectations
The Federal Reserve is almost certain to hold rates steady at its policy meeting next week. That’s the view based on recent statements from Fed officials, analyst comments and market bets.
But what is much less certain is what the Fed expects to do in the remaining six months of the year.
The June monetary policy meeting will be accompanied by a “dot plot”, a summary of projections that visualize central bankers’ expectations regarding potential rate cuts in the coming months and years.
“The big question is the median point for 24,” he wrote. Michael FeroliJP Morgan analyst, in a Friday preview of the upcoming Fed meeting. “We think there will be two easements this year, down from three at the March meeting.”
Since the Fed’s last policy meeting, sentiment around interest rate policy has become more pessimistic, as subsequent data on inflation and employment show signs of an economy that is still too hot to warrant a cut in rates.
The question on many investors’ minds is how many cuts Fed officials anticipate.
The Fed Hawks are expected to forecast just one or no cuts this year, Feroli said. Meanwhile, the Doves are expected to project two.
As for the prospect of rate hikes, which some Fed officials have agreed to, Feroli doesn’t see that in the cards.
Fed Chairman Jerome Powell, who has been seen as largely dovish in the face of sometimes contradictory data, will likely stay on message, taking a broader view, Feroli said. It is expected to emphasize that inflation is decreasing, albeit stubbornly, and that the labor market is achieving better balance in a context of solid growth.