FOMC Preview: Policy Expectations in the Final Phase of Powell’s Tenure

Background information: Federal Reserve Chair Jerome Powell’s term will end in May 2026, and the market is closely watching the policy direction he will take in the coming months. Ongoing Middle East conflicts have led to declines in both the U.S. stock market and Bitcoin prices, with investors focusing on the upcoming Federal Open Market Committee (FOMC) meeting and its interest rate decisions.

Main events: The Federal Reserve is expected to keep interest rates unchanged, with a likely hold again in July. If Middle East tensions continue to drive oil prices higher, the timeline for rate cuts may be pushed back. The FOMC will release its latest Summary of Economic Projections, including forecasts for interest rates, unemployment, GDP, and Personal Consumption Expenditures (PCE) through the end of 2025. In March, most committee members projected the end-2025 interest rate at 3.75%-4%, compared to the current 4.25%-4.5%, suggesting there could be two 25-basis-point rate cuts before year-end.

Impact and significance: Powell may not be reappointed, and the next eight FOMC meetings will shape his policy legacy. The market expects rate cuts during his remaining term, but historically, outgoing Fed chairs have often adopted a hawkish stance in their final year. Powell may opt for a “higher for longer” strategy, delaying rate cuts. Investors are advised to pay close attention to Powell’s press conference for clearer policy signals.