Wednesday’s Federal Reserve decision is mostly about the signals for monetary policy moves later this year. The CME Group’s FedWatch tool shows traders are pricing in a near-zero chance of a rate cut at this meeting. That said, Wall Street still expects the central bank to lower rates three times before year-end, as U.S. economic growth is anticipated to slow. Investors have been looking for lower Fed rates since the year began. President Donald Trump has also chastised Fed Chair Jerome Powell for not cutting rates already. But the commander in chief and Wall Street may have to wait longer than they’d like, according to Bank of America. “The market is still pricing in more than 3 cuts for this year, likely starting in July,” BofA economist Claudio Irigoyen. But given “the Fed’s dual mandate, we stick to our view that the optimal policy response would be to delay the cuts prioritizing inflation risks and anchoring its credibility unless activity data falls off the cliff.” Worries over persistent inflation have crept into investors’ minds as the U.S. moves forward with protectionist trade policies, including a 145% levy on Chinese goods. Stocks sold off after Trump’s April 2 tariff announcement but have since recovered those declines, spurred by a 90-day pause on some of the higher tariffs. “Stagflation seems to be the hardest word … But everything keeps pointing in that direction,” Irigoyen wrote. “Higher inflation and lower economic activity will lead to a stagflationary scenario, which makes the Fed’s job not only more difficult but its reaction function path dependent.” The Fed will deliver its latest policy announcement at 2 p.m. ET, followed by regular Powell news conference afterward, at 2:30 p.m. Elsewhere Wednesday morning on Wall Street, UBS upgraded Logitech International to buy from neutral, citing strong gaming trends from Generation Alpha consumers (born between 2010 and 2024). Analyst Joern Iffert added that “the share price has come down already, reflecting investor uncertainties, and we look through some challenging quarters.” On top of that, profit “margins and cash flows will remain on healthy levels, in our view, supported by pricing power in key products and optimized regional sourcing (away from China).”
