Despite President Donald Trump pushing for lower interest rates, economists predict the Federal Reserve will maintain its wait-and-see approach and keep rates steady on May 7.
The Fed is cautious and waiting for more clarity before making any changes, given the mixed economic signals this year. Job growth and consumer spending have been positive, but GDP shrank in the first quarter, and inflation remains above the Fed's target. Concerns about tariffs driving inflation higher and recession risks persist.
"The economic picture is complex, and it's too early to determine if or when rate cuts might occur," said Michele Raneri from TransUnion.
The Fed will announce its decision at 2 p.m. ET following a two-day meeting. President Trump has criticized the Fed's approach, but legally, he cannot remove the Fed chair, Jerome Powell.
Economists monitor inflation through indexes like the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) index. The Fed focuses on the PCE index, which rose 2.3% in March.
While the economy faced challenges in the first quarter, with GDP contracting, factors like trade policy uncertainty and inflation impact economic growth. Expectations vary on rate cuts, with some predicting cuts starting in July.
The Fed's decision will influence borrowing costs, impacting loans, credit cards, and mortgages. Lower rates stimulate spending and investment, while higher rates curb inflation but slow economic growth.
Traders and economists are monitoring the Fed's stance on rates, with expectations of steady rates in May and potential cuts later in the year. Discussions about trade deals and economic stability are ongoing.
Stay informed with live updates and expert analysis on the Federal Reserve's interest rate announcement and its implications for the economy.