The Big Game for American Rates: Powell vs. Trump

The Federal Reserve Open Market Committee (FOMC) is scheduled to make a decision on interest rates on May 7 in the evening. The market does not expect the US central bank to return to monetary easing that day. The CME FedWatch barometer indicated at the end of April that there was only a 7 percent chance of a US interest rate cut at the May meeting.

It is also unlikely that the Fed will decide to return to easing monetary policy right after President Donald Trump publicly called for a quick rate cut and sharply criticized Jerome Powell, the Fed chairman (calling him, among other things, “Mr. Too Late” and “the big loser”). The Fed does not want to give even the slightest impression that its policy is influenced by the White House. So a rate cut in May seems out of the question at this point. However, this does not mean that the Fed will not ease monetary policy in the coming months. It could do so as early as June.