Federal Reserve policy makers are meeting this week, with an announcement on the benchmark interest rate expected today. Most observers anticipate the central bank will keep rates unchanged at the conclusion of its FED Meeting.
The decision, set for 2 p.m. ET, follows a period of economic uncertainty marked by shifts in the global economy. FED officials are considering inflation and unemployment trends in the US as they determine policy. A press conference with FED Chair Jerome Powell is scheduled for 2:30 p.m. ET.
Markets showed little movement ahead of the announcement. The S&P 500 was mostly flat, as was the Nasdaq Composite, while the Dow Jones Industrial Average saw a modest gain. Expectations are firm, with CME's FedWatch tool indicating a nearly 100% probability of rates holding steady.
The policy deliberations occur as the central bank operates under political pressure. President Donald Trump has publicly called for rate reductions and criticized Powell's leadership.
Adding complexity to the economic picture are trade policies, including aggressive tariffs announced by the President. These actions have affected global trade and could potentially introduce inflationary pressures, complicating the Federal Reserve's future rate path.
Ongoing trade discussions may offer some context. Treasury Secretary Scott Bessent is expected to meet with Chinese officials in Switzerland this week for preliminary talks.
Credit card data provided a mixed view of consumer activity in April, suggesting potential slowing in spending year over year compared to March figures. Some data showed an increase in spending late in the month.
Earnings reports also factored into market activity, though separate from the rate decision focus. Companies like Charles River Laboratories and Rockwell Automation saw share price gains after releasing results that exceeded estimates. Bank of America upgraded Honeywell International, pointing to its business mix and valuation.
Chris Brigati, chief investment officer at SWBC, commented on the potential economic impact of trade actions.
"There are serious concerns that the tariff situation will introduce inflationary pressures that will begin to reveal themselves as time progresses," Brigati said. "We fear inflation will remain elevated and sticky, if not specifically moving meaningfully higher, causing interest rates to remain higher until inflation is tamed and the Fed can react with a more aggressive rate cutting policy to spur economic growth."
