US Fed Nears Rate Hold as Markets Watch Powell

The Federal Reserve, under Chair Jerome Powell, is widely expected to hold interest rates steady, with markets assigning a 99.9% probability to no change in the current 4.25% to 4.50% range. Powell's upcoming statements, especially regarding inflation and tariffs, are anticipated to influence market sentiment more than the rate decision itself, as inflation remains the Fed's primary concern. Despite President Donald Trump's dissatisfaction with Powell's policies and his intentions to nominate Powell's successor in 2026, the Fed is likely to maintain a cautious, hawkish stance through Powell's remaining tenure, consistent with historical patterns of past Fed chairs. However, futures markets show record bets that the Fed will adopt a more dovish approach swiftly after Powell’s term ends, driven by expectations that Trump's appointee will cut rates soon after taking office. Uncertainty over tariffs and their inflationary impact continues to complicate the Fed's outlook, contributing to mixed expectations on the timing and scale of future rate cuts. Overall, Powell appears focused on preserving his inflation-fighting credibility and the Fed's political independence amid political pressures.