Investors are counting on Jay Powell to keep Fed rate cut plans on track

Investors are counting on Federal Reserve Chair Jay Powell to keep rate-cutting plans on track this week with a 25 basis point reduction, despite some signs of stubborn inflation and mixed signals about the job market.

“[This] week’s FOMC meeting is a refreshingly easy call,” JPMorgan Chase (JPM) chief economist Michael Feroli wrote in a note. “The reasoning for a cut is still valid,” he added.

That doesn’t mean the discussion among members of the Federal Open Market Committee on Wednesday and Thursday will necessarily be a smooth one. Fed policymakers will have to make sense of recent data indicating a strong economy, persistent inflation, and a muddled jobs market disrupted by weather and worker strikes.

There could be a debate between those who want to cut, those who could support a pause, or those who would support a cut combined with language designed to communicate a more gradual approach to future reductions.

 

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