The Fed today is expected to keep interest rates steady at 4.25-4.50% and overall maintain a neutral stance given the uncertainty around tariffs and inflation expectations.
The market is pricing around 80 bps of easing by year-end but Fed Chair Powell could push back against such dovish expectations triggering a repricing to around 50 bps, which has been the Fed's baseline for 2025.
If we get something very positive, like much lower than expected reciprocal tariffs or even free trade deals, there will likely be a strong surge in demand. We've been hearing and seeing from the economic reports that business are cautious due to tariff uncertainty and that's holding back activity. With a positive resolution, economic activity will pick up fast.
This is something to keep in mind because such changes offer great trading opportunities as the market readjusts to new conditions. Contingency planning is an essential part of a trader's analysis.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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