The Fed is expected to hold interest rates steady at its Federal Open Market Committee (FOMC) meeting on July 30, according to Yardeni Research.
According to research data, the probability of a rate cut remains at just 4.7%. While the strong employment data released in June delayed short-term rate cut expectations, a moderate inflation report in September is expected to reinforce signals of a potential rate cut.
While markets have been on the rise with better-than-expected earnings figures announced for the second quarter, it is stated that if the Fed gives dovish messages next week, new momentum may be experienced in the stock markets.
Meanwhile, although it is claimed that Fed Chair Jerome Powell is under increasing pressure from the White House to lower interest rates, market experts and economists do not expect a dovish move from the central bank in the short term.
One of the most significant reasons for this is that Powell cannot make decisions alone on the FOMC, which sets monetary policy. He is only one member of the 12-member board. Furthermore, the Fed has a dual mission: to keep inflation under control while ensuring maximum employment. The current strong labor market does not create an environment that necessitates interest rate cuts. Furthermore, any new tariffs that may be implemented in the coming period could increase inflation.
The Federal Reserve has held the federal funds rate target steady between 4.25% and 4.50% since December. The bank, which also left the rate unchanged at its June meeting, based its decision on inflationary rigidity, the impact of trade tariffs, and the need for more data.
*This is not investment advice.