Rate Decision Preview: Market Focused on Milan Vote and Powell's 'Hawkish Risk'

April 30: Markets widely expect the Federal Reserve to hold interest rates steady, but the statement’s wording and policy signals from Powell’s press conference remain key focus areas. For the policy statement, the FOMC is anticipated to vote 11-1 to keep rates unchanged, with Mester possibly the sole dissenter backing a rate cut. That said, it’s not out of the question she could drop her rate-cut push and join a unanimous decision. The Fed may also tweak its labor market characterization to reflect hiring remains weak but overall employment is stabilizing. It could reassess language on the Middle East and potentially remove the phrase “further interest rate adjustments,” preserving more flexibility for future policy moves. Powell’s press conference carries “hawkish risks,” per institutional views. He’s expected to keep emphasizing inflation resilience, policy uncertainty, and the need for patience. He may also note rising energy prices will slow the pace of rate cuts. Markets are also watching whether Powell will address “discussions of a rate hike” and if he plans to serve as a Fed governor through January 2028. If Powell explicitly rules out a second term as governor, markets may further boost expectations that Trump will gain more influence over Fed policy going forward.