Fed Expected to Hold Rates Steady in May—Traders Yawn, Markets Itch for Action

Another month, another ’wait-and-see’ Fed meeting. Market consensus says Powell & Co. won’t touch rates this time—because why rock the boat when you can kick the can?

The non-event event: With inflation still sticky and Wall Street’s algo-traders twitchy, the Fed’s safest play is... doing nothing. Cue the collective shrug from institutional investors.

Crypto’s silent cheer: While traditional markets tread water, Bitcoin hodlers quietly hope prolonged low rates keep the cheap-money spigot dripping. (Because fundamentals are so 2017.)

Closing thought: If central banking were a TV show, this season would be titled ’The Great Stall’—brought to you by the fine print in your 401(k) statement.

Rates Expected to Remain Steady

According to CME FedWatch data, the probability of the Fed lowering rates to the 400-425 basis points range is pegged at 9%. Additionally, Polymarket data indicates a 90% likelihood that interest rates will stay constant. While Bank of America predicts four rate cuts within this year, market expectations are increasingly leaning towards maintaining the current rates.

Expert Opinions and Economic Data

Market experts emphasize that economic data and market activities will influence Fed decisions. Furthermore, signs of declining new orders and rising prices suggest that a rate cut may not be feasible. The impending release of U.S. GDP and PCE inflation data is also expected to play a crucial role in decision-making.

Fed Chair Jerome Powell stated, “We are not considering rate cuts without assessing their economic impact. Situations that could lead to inflation hinder us from making hasty decisions in monetary policy.”

Former President Donald Trump remarked, “Now is the right time for a rate cut. Otherwise, an economic slowdown may be inevitable.”

Market participants are closely monitoring economic data to be released on April 30. These figures are anticipated to significantly influence the Fed’s decision in May.

Changes in interest rates could result in increased capital flows into riskier assets, but reductions may not occur until at least June. Under the pressure exerted by Trump, it is challenging for the Fed to take steps that could undermine perceptions of its independence.

Current assessments indicate a low probability of a rate cut. Based on economic data, expert opinions, and statements from Fed officials, a trend towards maintaining existing policies is evident. During the decision-making process, the market is expected to evaluate all available data carefully.