Monetary policy

The FOMC's decision to "hold rates steady while signaling only two cuts this year was a subtle but powerful shift," said James Pruskowski, CIO at 16Rock Asset Management.

The panel is not expected to change rates, but the dot plot will be watched to see if the Fed's prior projection of two rate cuts this year holds.

The U.S. economy added 139,000 jobs, a healthy clip that counters the president's calls for a rate cut to bolster the labor market.

The Federal Open Market Committee will meet on June 17-18. While no rate cuts are expected at this point, things can change quickly. Lauren Saidel-Baker, economist at ITR Economics, provides her take on the meeting the new Summary of Economic Projections and Fed Chair Jerome Powell's press conference.

The Federal Reserve chair said there is "room for improvement" in how the central bank conveys economic uncertainties to markets and the public.

"The threat of having both inflation and unemployment rising simultaneously continues to create a big headache for the Fed's interest policy," said Wells Fargo Investment Institute global fixed income strategist Luis Alvarado.

The specter and economic implications of tariffs coupled with still above-target inflation and a healthy labor market will sideline policymakers at this week's meeting, analysts said, but not everyone agrees when the next rate cut will be.

The Federal Reserve governor remains optimistic about tariffs being a one-time shock to prices, but the central bank still needs more clarity about what the policies will look like.

Federal Reserve Gov. Adriana Kugler said tighter monetary policy has proved to be less impactful on nonbank lenders during the post-pandemic era.

Anna Paulson, executive vice president and director of research at the Federal Reserve Bank of Chicago, will replace outgoing Philadelphia Fed President Patrick Harker.

In a post on his social media platform Thursday morning, the president criticized the Federal Reserve's reluctance to lower rates and said the chair's departure "could not come soon enough."

The central bank wants to let Trump's policies play out across the economy before deciding which way to move interest rates, and it's too soon to know what the impacts will be, the Federal Reserve chair said.

Unemployment remained relatively stable amid declining consumer confidence and an emerging trade war, which have roiled markets.

Get expert analysis of the May FOMC meeting, inflation outlook, and Powell's comments.

With no policy changes expected, analysts are eagerly awaiting the new Summary of Economic Projections for clues about future monetary policy.

Federal Reserve Chair Jerome Powell emphasized the need for patience amid uncertainty over the Trump administration's policies, saying there would be no immediate rate changes but that the Fed would proceed carefully.

Mike Goosay, Chief Investment Officer of Global Fixed Income at Principal Asset Management, breaks down the Federal Open Market Committee meeting, Chair Powell's press conference and the SEP.

Muni yields were bumped one to eight basis points, depending on the scale, while UST yields fell three to 10 basis points, with the greatest gains out long.

"There are a lot of moving parts here with the potential to either help or hinder the Fed's quest for price stability and maximum employment" this year, noted BMO Deputy Chief Economist Michael Gregory, who says the Fed will "stand pat."

The Federal Open Market Committee cut the fed funds target again in December but signaled fewer cuts in 2025. There was some dissent. The markets are watching to see if the Federal Reserve pauses its easing cycle in January. Brian Rehling, head of global fixed-income strategy at Wells Fargo Investment Institute, recaps and parses the previous day's FOMC meeting and Fed Chair Jerome Powell's press conference.