Powell’s inflation warning dampens rate cut expectations for June FOMC meeting: FT

by Estefano Gomez · Just now ago

Powell’s warning about inflation risks has reduced expectations for a rate cut at the June 18 FOMC meeting. His cautious remarks suggest a lower chance of a cut.

The market reacted quickly. The US-Israel conflict with Iran pushed oil prices to $108, fueling inflation fears and complicating the Fed’s decisions. Powell’s focus on balancing low rates with inflation control hints at a cautious approach. The Fed Rate Decision for June 18 now faces skepticism about a rate cut due to geopolitical tensions and inflation pressures. The September 17 and December 31 meetings are also under watch for potential policy changes.

Trading volume is absent, with no face value trades in the last 24 hours. This inactivity indicates traders are waiting for clearer signals. Geopolitical instability and oil price volatility are affecting inflation expectations, complicating the Fed’s decisions. Powell’s statement highlights that inflation is a concern, but the Fed may not rush to cut rates without clear economic indicators.

Traders should note that betting on a rate cut requires confidence in inflation cooling or a Fed policy shift. Without this, maintaining current rates seems more likely. A YES share at 22¢ would pay $1 if a rate cut occurs in June, but this bet appears less attractive without more dovish signals from the Fed.

Watch for upcoming Fed speeches and economic data releases, especially CPI and PCE figures. Any change in Powell’s language or unexpected data could significantly impact these markets.

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