Recent market fluctuations have led investors to reduce their expectations for a Federal Reserve interest rate cut, which now stands at a 16% chance of a 25bps cut in May, down from 45% just a week ago. Fed officials, including Governor Chris Waller, have indicated that while tariffs may have a temporary inflationary impact, they are positioned to adjust policy if the economy slows significantly. Chair Jerome Powell emphasized a cautious approach amid ongoing policy discussions related to tariffs, particularly in light of uncertain announcements from the administration. Additionally, Powell stated the Fed is prepared to wait for clearer economic indications before making policy changes. Upcoming speeches from key Fed officials, including Powell and Governor Lisa Cook, will further clarify the central bank's stance amid these developments.

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