{"id":13041,"date":"2025-05-08T07:45:41","date_gmt":"2025-05-08T07:45:41","guid":{"rendered":"https:\/\/alchemymarkets.com\/?post_type=market_insights&p=13041"},"modified":"2025-05-08T11:46:48","modified_gmt":"2025-05-08T11:46:48","slug":"fomc-may-2025","status":"publish","type":"market_insights","link":"https:\/\/alchemymarkets.com\/sv\/education\/market-insights\/opening-bell\/fomc-may-2025\/","title":{"rendered":"”We Can Be Patient” \u2014 Powell’s Words Crush June Rate Cut Hopes"},"content":{"rendered":"\n

JUST IN \u2014 May 7 FOMC Turns Hawkish<\/strong><\/h2>\n\n\n\n

The tone from May 7th\u2019s FOMC press conference marked a sharp contrast to the March 20th FOMC<\/strong>, where policymakers still projected two rate cuts in 2024<\/strong> via the Summary of Economic Projections (SEP). Now, with Chair Powell emphasising a ”wait-and-see” stance amid rising inflation and unemployment risks, markets are rapidly repricing expectations.<\/p>\n\n\n\n

\ud83d\udc49 What\u2019s next for stocks and forex?<\/em><\/p>\n\n\n\n

Volatility is back on the table, with USD bulls reawakening and equities hesitating near key technical levels.<\/p>\n\n\n\n

June Rate Cut Expectations Drop Drastically \u2014 68% to 23.9%<\/strong><\/h2>\n\n\n\n

A week ago, the Fedwatch Tool projected a rate cut expectation of 68% on June’s FOMC rate decision day. However, like a knife cutting through butter, these expectations have fallen by 44.1 percentage points after the May press conference.<\/p>\n\n\n\n

Time Stamp<\/strong><\/td>June Rate Cut Probability<\/strong><\/td><\/tr>
1 week ago<\/td>68.0%<\/td><\/tr>
After May press conference<\/td>23.9%<\/td><\/tr>
Change<\/td>\u25bc 44.1 percentage points<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Quick Summary of Powell\u2019s Speech and Replies to Media<\/strong><\/h2>\n\n\n\n

The market\u2019s negative read came down to Powell\u2019s tone and the message between the lines.<\/p>\n\n\n\n

First, he notably ducked any effort to reaffirm the two-cut outlook for 2025<\/strong>\u2014dodging questions and deferring guidance until the June SEP. That alone was enough to rattle expectations.<\/p>\n\n\n\n

Then came the emphasis: the Fed\u2019s firmly planted in \u201cwait-and-see\u201d mode. Powell underlined patience, flagged increased downside risks, and made clear they\u2019re in no rush.<\/p>\n\n\n\n

His repeated line? Policy is in a \u201cgood place\u201d\u2014a signal that they\u2019re holding rates unless data forces their hand.<\/strong><\/p>\n\n\n\n

Add to that a fresh warning: the Fed sees elevated risks of both higher inflation and higher unemployment in 2025, with tariffs now cited as a potential accelerant<\/strong>. Powell called the inflation impact \u201cpossibly persistent,\u201d depending on passthrough speed and expectations.<\/p>\n\n\n\n

For now, he sees no real stress in the data\u2014just rising concern in sentiment. But that disconnect only fuels uncertainty.<\/p>\n\n\n\n

DXY Chart Analysis<\/strong><\/h2>\n\n\n\n

For now, DXY still remains in bearish control. It\u2019s repeatedly rejecting the Daily EMA 20 (Exponential Moving Average<\/a>), and also at prior broken lows; highlighted by the red boxes.<\/p>\n\n\n\n

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