Investing.com - Investors will be focused on any possible guidance the Federal Reserve may provide about a potential interest rate cut in June at the conclusion of the central bank’s two-day policy meeting on Wednesday, according to analysts at Sevens Report.
In a note to clients, the Sevens Report analysts said the "more forceful" a signal of a rate cut in June "the better", adding that they will also be noting how U.S. President Donald Trump reacts to the Fed’s latest decision.
The Fed is broadly expected to leave borrowing costs unchanged, despite repeated calls from Trump for officials to slash borrowing costs.
"[I]t is widely known and expected that the Fed won’t cut rates [in May], but despite that being the consensus expectation, the lack of action may draw the wrath of President Trump," the Sevens Report analysts wrote.
In a television interview over the weekend, Trump called Fed Chair Jerome Powell a "total stiff", but said he would not remove Powell from his post prior to the end of the central bank leader’s term in May 2026.
Trump recently rattled already-jittery markets by suggesting that he could oust Powell for not moving quick enough to bring down rates. He has since appeared to temper his position, although he told NBC News on Sunday that Powell "should lower them".
"And at some point, he will. He’d rather not because he’s not a fan of mine," Trump said.
Powell has stressed that the Fed is in a "wait-and-see mode" on rates, as policymakers eye broader economic uncertainty due to Trump’s aggressive trade actions and focus on their dual mandate of maintaining price stability while supporting the labor market.
"We may see a bit of disappointment and a mild dip in stocks if the Fed doesn’t more forcefully point to a June rate cut, but the decline shouldn’t be intense," the Sevens Report analysts said.