Rabobank Senior US Strategist Philip Marey Global Economics & Markets discusses the upcoming Federal Open Market Committee (FOMC) meeting, where the Federal Reserve (Fed) is expected to keep policy unchanged and Chair Powell may face questions about the economic impact of the war with Iran. The bank still projects two rate cuts in 2026, in September and December, but warns that war-related data could lead them to remove, rather than add, cuts from their forecasts.

FOMC on hold as cuts still eyed

"The FOMC is widely expected to remain on hold at the April 28-29 meeting. Governor Miran may dissent again."

"At the press conference, Powell could shed light on the FOMC’s take on the economic data that have been released this month, how they reflect the impact of the war with Iran, and what this means for monetary policy."

"We still expect two rate cuts this year, one in September and one in December. Once Warsh becomes the new Chair, he will try to convince the Committee to make more than the single cut in their most recent projections."

"Whether he succeeds depends on the incoming economic data, which will be heavily affected by the war. On balance, we think that in the coming months we are more likely to drop a rate cut from our forecasts than add one."

" It is still unclear whether the April meeting is going to be Powell’s last as Fed Chair. If the confirmation of Warsh stalls, Powell may still serve as Chair pro tempore in June."

"During the press conference, Powell may also be asked about his future as a Fed Governor, after his term as Chair ends on May 15."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)