The Federal Open Market Committee (FOMC) meeting begins today, though the Fed won’t release its interest rate decision until tomorrow, July 30.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
President Trump has been pressuring Fed Chair Jerome Powell to lower the federal funds rate for several months, although his wish will likely remain unfulfilled. The odds of a 25-bps rate cut tomorrow sit at a minuscule 3.1% compared to 4.1% a week ago and 18.6% a month ago, according to the CME FedWatch tool.
Rates will likely Come Down in September
However, the Fed is likely to begin the process of cutting rates during the next FOMC meeting on September 16-17. The odds of a 25-bps cut sit at 63.6% compared to 58.0% a week ago and 74.8% a month ago. A 50-bps cut is on the table as well, with odds of 2.0% compared to 2.4% a week ago and 16.6% a month ago.
A rate cut can stimulate the economy and stocks by lowering the cost to borrow money for both companies and individuals. At the same time, the act of cutting rates signals that the economy is weakening, creating a double-edged sword.
Track the federal funds rate and other key economic metrics with TipRanks’ Economic Indicators Dashboard.
