The Federal Reserve will announce the latest interest rate decision, will it trigger a financial upheaval?
1. Decision Time and Market Expectations
The announcement will be made at 2:00 AM Beijing time on May 8. According to data from the CME Group, the probability of maintaining the interest rate in May is 97.2%, while the probability of a rate cut is only 2.8%. A total of three rate cuts are expected for the year, concentrated in the second half. If the April non-farm payrolls (increasing by 177,000) and the PCE price index perform steadily, the first rate cut may be postponed until July, with the policy rate likely to remain at 4.25%-4.50%.
2. Focus of Attention
Powell's stance is key. A "hawkish" tone may exacerbate conflicts with Trump and trigger market volatility; a "dovish" tone may boost the market and ease tensions. Trump has repeatedly called for rate cuts, and the standoff between both sides affects the market.
3. Economic Data Support
In April, non-farm payrolls increased by 177,000, the unemployment rate is 4.2%, the labor participation rate has rebounded, and the PCE price index shows easing inflation, but there is uncertainty regarding tariffs. If data such as the ISM non-manufacturing PMI improve, it will support the Federal Reserve in maintaining the interest rate.
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