Federal Reserve holds, signals possible cut(s) at June meeting
MONTHLY MARKET COMMENTARY |
At the June Federal Open Market Committee (FOMC) meeting, the Federal Reserve left the target federal funds range unchanged, but the signal for more monetary policy accommodation strengthened. In contrast to the March announcement when no participants forecasted a rate cut, seven of the 17 FOMC participants now forecast two rate cuts by year-end (25 basis points each).
Despite their accommodative stance, Fed expectations continue to lag market-implied expectations. Federal funds futures priced in three rate cuts by year-end at the close of trading. In his press conference, Fed Chair Jerome Powell stressed the FOMC participants’ preference to take a patient approach to rate policy, citing mixed signals in economic, business and household data.