FOMC Preview
The Fed is widely expected to cut rates by 25bps at today’s meeting. Alongside the decision, we’ll also get the updated quarterly economic and rate projections.
The key things to watch will be Powell’s tone in the press conference, whether there are any notable dissents, and what the dot-plot shows for the path of cuts.
- Standard Chartered: Expect a 50bps cut, but Powell is unlikely to commit to a path of further easing. Their base case is one additional 25bps cut this year and just one more in 2026.
- Bloomberg Economics: Expect a 25bps cut, not because the Fed’s dual mandate demands it, but because markets and the White House want it. Powell is also seen as keen to protect the Fed’s independence. Economists surveyed expect two cuts this year, implying just one more after today, either in October or December.
- Goldman Sachs: Expect the statement to acknowledge slower job growth but no signal toward an October cut. Their dot-plot base case is two cuts in 2025 and two in 2026. They see 25bps cuts in both October and December, with 50bps possible if the jobs data weakens further.
- JPMorgan: Expect two or three dovish dissents in favour of a larger 50bps move. They see 25bps cuts in October and December followed by a pause.
Historical Data
The Fed has cut rates with equity markets within 1% of all-time highs 16 times in history. In every single case, the S&P 500 was higher a year later, with an average return close to 15%.
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