Major Investment Banks Look Ahead to Fed Rate Decision: Widely Expected to Stay Put, Focus on Whether Milan Continues "Rate Cut Path"

April 30 — Several Wall Street firms shared their outlooks on the Federal Reserve’s latest interest rate decision. Most investment banks expect the Fed to hold rates steady, with markets focused on Fed Governor Milan’s stance on future rate cuts. JPMorgan Chase forecasts a 11-1 vote, with Milan casting the sole dissent in favor of a rate cut. Meanwhile, MUFG Bank believes Milan may walk back his prior rate-cut position. Goldman Sachs, Morgan Stanley, Natixis and other institutions broadly expect limited policy changes at this meeting—since the Summary of Economic Projections (SEP) and dot plot will not be released. The Fed may acknowledge improved employment and rising inflation in its statement, but overall policy guidance is not seen shifting significantly. Deutsche Bank, however, argues the Fed could remove the phrase “further rate adjustments” from its statement to leave room for future rate hikes. UBS expects the statement may strengthen the narrative that inflation is driven by energy prices and soften forward-looking guidance. Additionally, Danske Bank notes that any dovish easing hints from the Fed could trigger a pullback in U.S. Treasury yields and a broad-based weakening of the U.S. dollar.