Investors confused about the Fed's rate path look to Jay Powell for answers

Federal Reserve officials face a lot of questions as they convene for their two-day policy meeting this week, and investors are hoping Chair Jerome Powell will provide some answers.

There was a time this year when markets had bet on six cuts starting in March. That slipped to June and then July. Now they are pricing in just a 45% chance of a first rate cut in September. The housing component of inflation is what’s really keeping inflation elevated, he said, but that’s still slowing on a year-over-year basis.He still believes the Fed’s preferred inflation gauge — the Personal Consumption Expenditures index — will continue dropping enough for the central bank to begin cutting rates by the middle of the year., and Tilley noted that’s still within the range of the central bank's 2.6% forecast for the end of the year.

Former Kansas City Fed president Esther George said she thinks the Fed could still cut rates in the second half of the year, and that two cuts this year would be reasonable. But for cuts to start in July would require the “pretty dramatic affirmation” of a slowing economy. " would like to avoid hurting the economy with these rates and I don't know if that's going to be possible," George said.

Powell warned on April 16 that he didn’t expect the PCE inflation number would show progress, and he was right. "They will have to continue to message that they've seen inflation stall the first three months of the year and they don't want to see it accelerate," said George. Mark Peterson/Getty ImagesDonald Trump weighed in on the White House Correspondents’ Dinner on Sunday, giving a terse, certified rotten review of its key players.“The White House Correspondents’ Dinner was really bad,” he wrote on Truth Social.

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