Fed Wrap – Fed Holds in Anticipation of Economic Uncertainty

Ryan Weldon, from IFM’s Debt Investments team in New York, features in our Fed Wrap market update videos discussing central bank themes in debt markets, with a particular focus on the US Federal Reserve (Fed).

In this edition, Ryan discusses the outcomes of the May Fed meeting, the Fed’s current wait-and-see approach with US data, and what they are looking at before making any policy related decisions.

At the May meeting, the US Federal Reserve held rates, maintaining the upper band of their policy rate at 4.5%.  The statement was updated to highlight the Fed’s view that economic uncertainty has increased further and that the risks of higher inflation and higher unemployment have risen.  Despite the uncertain outlook, the Fed also indicated that economic activity has continued to expand at a solid pace.  The statement did note that net exports have already created data volatility which will prove to only complicate the Fed’s future decisions.  Overall, the statement and decision came in as expected and supports recent Fed commentary that a wait-and-see approach is preferred as the US economy responds to the Trump administration’s tariff policy.