All Eyes on Powell: Will the Fed Cut as Tariffs Shake the Dollar?

As global markets remain volatile amid ongoing tariff tensions, all eyes are now on the upcoming Federal Open Market Committee (FOMC) meeting, which is expected to offer clues about the future direction of U.S. interest rates. While many investors and economists had been hoping for rate cuts in 2024, the likelihood of that happening anytime soon appears increasingly slim. 

What is FOMC?

The Federal Open Market Committee (FOMC) is the group within the U.S. central bank that sets interest rates. It meets several times a year to review how the US economy is doing and decide whether to raise, cut, or hold rates steady. These decisions affect everything from loan, EMIs, and savings returns to global markets and currencies.

Will the Fed slash interest rates?

Experts claim that this move looks unlikely. Although inflation has come down from its peak in 2022, it’s still not low enough for the Fed to feel comfortable. Prices—especially for services—are rising more than expected. So, the Fed is likely to keep interest rates unchanged at this meeting.

Also Read: Trump Asks Fed Chair to Cut Interest Rates and 'Stop Playing Politics' | Republic World

What to look out for?

Even if the Federal Reserve chooses to keep interest rates unchanged, its statements will carry just as much weight as its actions. Investors will be paying close attention to any indications of when rate cuts might begin, as well as the Fed’s outlook on inflation and overall economic growth.

Markets will also be looking for updates on how officials expect interest rates to move throughout the rest of the year. Additionally, Fed Chair Jerome Powell’s press conference will be closely watched for any subtle hints or shifts in tone that could signal future policy direction.

Will the Outlook change?

Yes, that looks a possibility. If inflation keeps slowing down and job growth stays steady, the Fed might consider a rate cut later in 2024—possibly around September or December. For the time being, it wants to be sure inflation is under control before making a move.

Will it impact Indian customers?

The Fed’s decisions affect borrowing costs not just in the US., but around the world. High U.S. interest rates often strengthen the dollar, impact stock markets, and influence interest rates in countries like India.