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- Merchants and economists confidently count on the Fed to depart rates of interest unchanged within the 4.25-4.50% vary.
- Upside dangers to the Fed’s inflation forecast are more likely to hamstring Jerome Powell and Firm from delivering any imminent rate of interest cuts.
- If there’s little trace of an imminent discount in rates of interest, we might see EUR/USD reverse extra considerably off the 1.0935 resistance.
When is the FOMC Assembly?
The March 2025 FOMC meeting will conclude on Wednesday, March nineteenth at 2:00 ET.
Fed Chairman Powell’s press conference will start at 2:30 ET.
What are the FOMC Curiosity Price Expectations?
Merchants and economists confidently count on the Fed to depart rates of interest unchanged within the 4.25-4.50% vary.
As of writing noon Monday, Fed Funds futures merchants are pricing in 99% odds of no change to rates of interest per CME FedWatch:
Supply: CME FedWatch
Assuming the Federal Reserve leaves rates of interest unchanged as anticipated, the market’s focus will instantly shift to the central financial institution’s Financial Coverage Assertion and the Abstract of Financial Projections (SEP) for potential market-moving adjustments. As soon as merchants have digested any tweaks on these fronts, Fed Chairman Jerome Powell’s press convention would be the predominant volatility catalyst for merchants as they search extra readability on how the Fed is viewing the obvious Q1 slowdown on the earth’s largest economic system.
FOMC Assembly Forecast
After delivering a 25bps rate of interest lower in December, the FOMC is nearly sure to depart rates of interest unchanged within the 4.25%-4.50% vary for the second straight assembly, regardless of indicators of slowing financial progress within the first quarter of the yr.
In latest weeks, Federal Reserve policymakers have emphasised the higher-than-usual uncertainty in regards to the financial outlook stemming from commerce uncertainties and monetary coverage changes, main them to emphasise a wait-and-see strategy to future rate of interest adjustments; within the phrases of Fed Chairman Powell, “We don’t have to be in a rush and are nicely positioned to attend for larger readability.”
In terms of the central financial institution’s Abstract of Financial Projections, count on detrimental revisions throughout the board, with downward revisions to 2025’s GDP forecast (from December’s 2.1% projection) and upward revisions to each its unemployment fee (from 4.3%) and crucially, its inflation forecasts (from 2.5%).
It’s the latter – upside dangers to the inflation forecast – that’s more likely to hamstring Jerome Powell and Firm from delivering any imminent rate of interest cuts till the latter half of the yr. Among the many Fed’s two mandates, the labor market is comparatively nearer to the Fed’s goal, whereas inflation has been above the central financial institution’s goal for practically 4 years straight by now. In opposition to that backdrop, the “Fed Put” of rate of interest cuts to stimulate the economic system any time progress or markets wobble will seemingly require way more turbulence than we’ve seen so far.
The hotly-anticipated “dot plot” of rate of interest projections can be a key space of focus, however the median expectation for 2 rate of interest cuts might stay unchanged, even when a number of policymakers count on fewer rate of interest cuts this yr. As at all times, the oft-quoted median forecasts can cover related particulars in regards to the distribution of forecasts amongst FOMC members.
Lastly, we’re more likely to see extra questions in regards to the influence of tariffs, DOGE, and the potential for tax cuts at this assembly. As typical, count on Powell to deflect and dodge questions on commerce and monetary coverage as a substitute re-emphasizing that the central financial institution doesn’t attempt to predict future insurance policies (e.g. tariffs, tax cuts, and so on), solely reply to their financial influence if and when they’re enacted. These kinds of questions will inevitably an even bigger speaking level over the following 4 years than they’ve been over the past 4 years.
EUR/USD Each day Chart
Supply: StoneX, TradingView
From a technical perspective, the world’s most widely-traded forex pair is probing a key resistance degree at 1.0935. After a powerful 500-pip rally to start out the month, EUR/USD spent the final month consolidating under the 5-month excessive at 1.0935, assuaging the near-term overbought situation.
With a number of developments to digest, we may even see some uneven value motion in EUR/USD as merchants weigh any adjustments to the assertion towards the changes to the financial projections, in addition to an important message Fed Chairman Powell tries to convey. That stated, merchants are at present pricing in a 70% probability of not less than one rate of interest lower by the Fed’s June assembly, so if there’s little trace of an imminent discount in rates of interest, we might see EUR/USD reverse extra considerably off the important thing 1.0935 resistance degree, doubtlessly bringing the important thing 1.0775 degree again into play.
