The Federal Reserve plans to release its next set of minutes on May 28, 2025, at 6:00 PM. This quarterly release provides an overview of the results from the most recent Federal Open Market Committee (FOMC) meeting. As expected, the committee voted to maintain the current benchmark interest rate of 4.25% to 4.50%. As speculation continues regarding future monetary policy adjustments, the minutes are anticipated to provide insights into the Fed’s stance amidst ongoing economic uncertainties, including trade tariffs.
The FOMC typically releases its minutes three weeks after each policy decision. These draft minutes give us an impressive look behind the curtain at the committee’s discussions, deliberations and priorities. Like all Federal Reserve communications, given the often unpredictable release cycle, analysts and market participants alike find themselves eagerly anticipating this release. The minutes are likely to show the dearth of agreement among committee members on where they want to take interest rates in the future. Consequently, a host of key questions will go unanswered.
Current Policy Stance
Either way, at the latest FOMC meeting, the committee decided that now was not the time to raise, leaving the Fed Funds Target Rate unchanged. Given the headwinds that the economy is currently experiencing, this decision signals a prudent interim step. So far, the Fed has been allowing $25 billion in Treasuries to mature per month. In April, they started paring this roll-off down to a mere $5 billion. This decision marks an important change in their overall policy towards asset management, focusing on delivering certainty during these unpredictable times.
New Chairman Jerome Powell underscored the Fed’s new approach in a late January press conference.
“We are comfortable with our policy stance.” – Chairman Jerome Powell
He continued to expound on the need to be ever watchful in times of economic boom and bust, saying,
“We think that right now, the appropriate thing to do is to wait and see how things evolve. There’s so much uncertainty.” – Chairman Jerome Powell
Economic Outlook and Inflation Concerns
The current economic outlook has gotten a lot more complicated, with Fed officials recognizing increased uncertainty around the consumer, inflation, and labor markets. Further, they’ve acknowledged some risk on either side of their dual employment/inflation mandate, connected to the complicated nature of labor force re-integration.
“Uncertainty around the economic outlook has increased. The Committee is attentive to the risks to both sides of its dual mandate.” – Fed officials
One of the most powerful drivers of inflation expectations has been trade tariffs. In response to our written request, Chairman Powell admitted that these tariffs are hugely significant in determining the overall inflationary direction of the economy.
“Looking ahead, the new Administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation. It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy.” – Chairman Jerome Powell
Market Expectations and Future Rate Cuts
Market participants have been laser-focused on any signals from the Federal Reserve of when they might begin cutting interest rates. Futures traders on the CME FedWatch Tool are predicting no rate cuts in June and July. This outlook is a reflection of the caution overall financial markets are experiencing. Recent dovish signals point to at least a 25 basis-point cut by September. As of today, the odds of this occurring are about 48%.
As the Federal Reserve prepares for its upcoming release of minutes, stakeholders will analyze these insights for guidance on future monetary policies. The absence of any signals regarding the timing or response to possible future rate cuts suggests the Fed will adopt a wait-and-see position. It will be no easy feat, with the myriad economic uncertainties shaped by national and global factors here to stay.