TL;DR
- The Federal Reserve is expected to keep rates between 5.25% and 5.50% in its May 7 meeting, with no imminent changes.
- Investors will pay close attention to Jerome Powell’s tone, as his statements could create market volatility.
- In June, employment and inflation data will be key to deciding if the Fed cuts rates, which could affect risk assets.
The U.S. Federal Reserve meeting scheduled for May 7 will be crucial for the financial market, although no change in interest rates is expected.
Currently, rates are between 5.25% and 5.50%, the highest in over two decades. Predictions suggest that the Fed will keep rates stable in this range since inflation has begun to slow, but is still above the Fed’s 2% target.
What Will the Fed Do Next?
May 7 FOMC Meeting:
98% chance of NO RATE CHANGE
Markets are nearly unanimous: the Fed is staying put at 5.25–5.50%.
Both CME FedWatch and Polymarket price in status quo as inflation cools but remains above target.
June 18 FOMC Meeting:
72% chance… pic.twitter.com/ZgpTXGlxfg
— Jim (@JP_Money_95630) May 4, 2025
However, what truly matters to investors is the tone that Jerome Powell, Fed Chair, adopts during the subsequent press conference. While no major monetary policy changes are expected in May, Powell’s comments could trigger volatility in the markets, especially in interest rate-sensitive sectors like tech stocks and cryptocurrencies.
If Powell uses aggressive language, mentioning terms like “persistent inflation” or indicating insufficient progress, a market decline is likely.
The Most Important Federal Reserve Decision Will Come in June
The real uncertainty will come in June, when economic conditions might change. During that month, the chances of a rate cut are expected to increase if employment or inflation data shows weakness. In fact, upcoming inflation and employment reports will be crucial in determining whether the Fed opts for a change in its monetary policy.
Possible Market Impact
If economic data does not improve, the likelihood of the Fed cutting rates will increase, which could push investors toward riskier assets, such as cryptocurrencies.
The current situation stems from the tension between the need to curb inflation and the impact that high interest rates have on economic growth. Therefore, the market will closely follow Powell’s upcoming statements, as his words, more than the Fed’s actual decisions, could set the tone for the next moves
