Monetary policy

The Federal Reserve's preferred measure of inflation held steady at 2.6% for the third month in a row, a positive reading that increases the odds of a September rate cut.

"Fed watchers will be parsing Powell's comments for signs that a 50bp rate cut is on the table for September," noted Lauren Saidel-Baker, an economist with ITR Economics. "However, the notoriously tight-lipped chair is unlikely to confirm this, making a 25bp cut the most likely outcome."

Gary Quinzel, vice president of portfolio consulting at Wealth Enhancement Group, gives his views about monetary policy and offers his opinion on the FOMC statement and Fed Chair Jerome Powell's press conference.

Economists expect the FOMC to hold rates, although some say there's a case to be made for a July cut, with Fed Chair Powell setting the table for September.

The Federal Reserve chairman has two years left in his term, which he will serve regardless of who occupies the White House. Powell's term on the Fed Board of Governors expires in 2028.

The Fed chief said "more good data" is needed before interest rate targets are lowered.

The Philadelphia Fed president said there can be as few as no cuts or as many as two this year, but if his projections are accurate, one decrease would be appropriate this year.

"We need to see more evidence to convince us that inflation is well on our way back down to 2%," Federal Reserve Bank of Minneapolis President Neel Kashkari said.

"I think the risks to inflation are still on the upside," Federal Reserve Bank of Cleveland President Loretta Mester said. "I think the risk to the labor market is dual-sided."

With no change in rates expected, analysts are interested in the dot plot and Fed Chair Jerome Powell's press conference.