Your Fed call is important to us… Please Stay on Hold!
May FOMC was consistent with our expectations (even if we learned very little)
- As expected, FOMC kept rates unchanged for a third meeting in a row (range of 4.25-4.5%). It was a unanimous decision among FOMC voters.
- The tone of this meeting was neutral to hawkish, as we expected. The Fed redirected the focus away from the recent negative Q1 GDP print. In the presser Powell emphasized there isn’t enough evidence that the soft data will result in a more pronounced weakening of the hard data.
- We did not learn much from this event as they clearly are not in a hurry to cut rates. Powell continues to highlight that the Fed is in a good place to be patient but in our view, the Fed is potentially under-estimating the underlying weakness in the economy that was present before the tariff shock. So the longer they wait to ease, the more they may need to do.
