The U.S. Federal Reserve is likely to keep interest rates unchanged at 4.25% to 4.5% in July, with Goldman Sachs and Fed Funds futures indicating a potential cut in September. Recent statements from the Fed show no immediate rate reduction despite President Trump's criticisms of Chairman Powell. The Fed is reportedly considering arguments for lowering rates, even as Republicans push to investigate Powell. This situation represents an unusual conflict between a president and the central bank, with notable historical precedent and implications for market predictions.
The Fed probably won't cut interest rates this month but it likely will in September, according to a reading of the tea leaves by Goldman Sachs and movements in the Fed Funds futures market.
Investors agree: The Fed Fund futures market is predicting a 97% chance of the base interest rate being kept on hold at 4.25% to 4.5% this month.
While the market is now used to this kind of invective, it's worth reminding ourselves that it is historically unprecedented for a U.S. president and his supporters to attack a central bank chief in this way.
Despite the chaos, it appears that Federal Open Market Committee (FOMC) is listening to the argument that interest rates should be lowered soon.
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