- Market Recalibrates Rate Cut Expectations: Polymarket now shows an 89% probability that the Fed will keep rates unchanged in June, with Goldman Sachs shifting its first rate cut forecast to July amid strong economic data.
- Trump Pushes for Immediate Cuts: Former President Trump criticizes Fed Chair Jerome Powell, labeling him “Too Late Powell,” and urges immediate rate cuts, claiming inflation is under control.
- Powell Holds Steady Amid Pressure: Despite political pressure, Powell maintains a cautious stance, emphasizing the need for more concrete economic data before considering any policy shifts.
The likelihood of a June Federal Reserve rate cut has plummeted, with Polymarket now showing an 89% chance that rates will remain unchanged. This shift reflects growing market sentiment that the Fed will hold steady amid persistent inflation concerns and strong economic data. So, let us dive in.
Market Expectations Shift
Earlier in the year, investors anticipated a potential rate cut as inflation showed signs of cooling. However, recent reports—particularly a strong U.S. jobs report—have led analysts to push their forecasts further into the year. Notably, Goldman Sachs now predicts the first rate cut will likely happen in July, rather than June.
Trump Pressures the Fed
Former President Donald Trump has been vocal about his frustration with Fed Chair Jerome Powell, demanding immediate rate cuts. In a recent Truth Social post, Trump argued that inflation is under control and that prices for gas, groceries, and energy are falling. He criticized Powell as “Too Late Powell”, insisting that the Fed should follow the lead of Europe and China, which have already lowered rates.
Will the Fed Hold Firm?
Despite political pressure, Powell has maintained a cautious stance, signaling that the Fed will wait for clearer economic data before making any moves. With inflation still above target and growth data holding firm, the Fed has little reason to rush into cuts. As such, Markets now overwhelmingly believe Powell would not cave to outside noise, at least not in June.
Final Thoughts
In conclusion, while Trump fires off posts and prediction markets lock in their bets, the broader market is waiting for a clear shift in inflation data. And until that shift materializes, the Fed’s stance seems firm on holding the line.
