The Fed Preview: No Action Expected, Despite Heavy Political Pressure

2025-05-04 09:30:00 ET

Summary

• The Fed is on hold until more clarity emerges about the net effect on the unfolding policy mix on growth, employment, and inflation.
• The Fed remains reactive and data-dependent, despite Trumps' pressure to be more pro-active.
• The next move will be triggered by incoming data, and it could be a cut or a hike, depending on the data.
• I expect a recession in 2025, and the Fed to cut modestly to 3.6%, and in this environment, I recommend buying short-term bond funds like VGSH, as an income producing safe haven.

No action expected

The Fed is set to meet next week for the May FOMC meeting and the consensus expectation is that it will leave the Federal Funds rate unchanged at 4.25-4.50%.

Specifically, based on Federal Funds futures, the probability of a 25bpt cut in May is less than 3%....

Read the full article on Seeking Alpha

For further details see: