The Federal Reserve starts its meeting tomorrow through Wednesday. The market is pricing odds of the central bank holding rates. However, might the Fed slash rates instead?
Mortgage holders prefer the Fed to lower its federal funds rate. That would lower the benchmark interest rate and consequently, mortgage rates. Savers who hold certificates of deposit accounts, however, would get lower interest income.
While the odds are very low that the Fed will cut rates, the Fed dot plot may shift this Wednesday. Trump’s punitive tariff policies will likely lead to increasing retaliatory tariffs. As U.S. trade slows with Canada, Mexico, and China, the price of goods may rise. In addition, the U.S. will not have enough domestic production ramped up to offset the supply from imports.
Since mid-February, investors dumped financial firms. JPMorgan Chase (JPM) peaked at $280.25 and closed 17.06% lower on March 14, 2025. Wells Fargo (WFC) is trading lower while Bank of America (BAC) indicated a double top at $48.00. BAC stock closed at $40.89 after buyers accumulated the stock below $40.00.
The Fed dot plot suggests that rates resume their decline this June. While investors worry about tariffs, lower inflation, and stable employment until then will matter the most. The Fed will not cut rates unless inflation rates are steady and the job market growth decelerates.
