The US Federal Reserve (FED) left interest rates unchanged last night as expected. In response to the Fed’s decision, Federal Reserve Chairman Jerome Powell verbally signaled the possibility of a two-pronged approach to interest rates.
Powell said the possibility of a rate hike was also discussed at the last meeting, but added that it was not considered a major scenario.
Powell’s comments signal that the Fed is taking a cautious approach to basing its policy decisions on data, leaving both rate cuts and rate hikes as possible options.
The Fed also added that it plans to cut rates once in 2026 and once in 2027.
As for March, Fed member Stephen Milan reportedly opposed this decision and advocated for a rate cut.
Expectations for rate hikes in April and June are beginning to reshape following the Fed’s rate decisions, with the probability of a 25 basis point hike in April dropping to 1%.
CME FedWatch data reveals the following conclusions after the Fed’s March interest rate decision:
“There is a 95.9% probability that interest rates will be left unchanged in April, and a 4.1% probability that interest rates will be raised by 25 basis points. No rate cut is expected.”
“The probability that interest rates will be left unchanged in June is 90.9%, the probability that interest rates will be cut by 25 basis points is 5.2%, and the probability that interest rates will be raised by 25 basis points is 3.9%.”
The next two FOMC meetings will be held on April 29th and June 17th.
*This is not investment advice.
