Because the Federal Reserve is expected to keep the rates stable at 4.25%-4.50%, traders see the FED chairman Jerome’s Post-Meeting Meetings closely aware of every indication of future policy direction.
At 12:10 GMT, XAG/USD $ 30.46, an increase of $ 0.06 or +0.20%.
Trump’s economic policy adds market uncertainty
This marks the first FED meeting since President Donald Trump’s second term started and his administration has already indicated a pressure on lower interest rates. However, the FED is expected to oppose immediate policy changes, given continuous inflation problems and economic uncertainty.
Former Dallas Fed President Robert Kaplan noted that although Trump wants the FED to accelerate its decision-making process, policy makers will probably retain until they have more clarity about the proposed rates of the administration, legal shifts and immigration policy. Although some of these measures can be disinflation, others – such as rates and labor shortages – can add an upward pressure on prices.
Esther George, former President of Kansas City, strengthened that the central bank should concentrate on its mandate of price stability, rather than political influence. This is a potentially conflict between the urge of the White House to speed reductions and the cautious approach to the FED.
Markt is waiting for the signals from Powell for future rate reductions
While traders see little chance of an immediate rate reduction, the FED statement and the Powell press conference are important factors of market sentiment. Investors are particularly focused on whether the FED recognizes an economic delay that can be relaxed later in the year.