The Federal Reserve’s Federal Open Market Committee (FOMC) will meet on Tuesday to deliberate on the state of the country’s economy and the Fed’s monetary policy. On Wednesday, the FOMC announcement will determine whether interest rates will remain unchanged or fall.
There is a lot of anticipation around this meeting with economists predicting a fall in interest rates by September. In fact, Fed Chair Jerome Powell signaled that rate cuts would be in the cards in the coming months during his semi-annual testimony to Congress.
“In our June meeting statement, we indicated that, in light of increased uncertainties about the economic outlook and muted inflation pressures, we would closely monitor the implications of incoming information for the economic outlook and would act as appropriate to sustain the expansion,” Powell told the House Financial Services Committee. “Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened.”
He had also pointed to softening investments in housing needed to be addressed. “In addition, housing investment and manufacturing output declined in the first quarter and appear to have decreased again in the second quarter,” Powell said.
Some other economic issues that needed to be addressed, according to Powell, included stagnation of middle and lower incomes, low levels of upward mobility for low-income households, and the long-term effects of rising federal debt.
However, according to two Federal Reserve Chiefs, interest rates are unlikely to be cut in July. Federal Reserve Bank of Atlanta President Raphael Bostic told Bloomberg that he is “not seeing the storm clouds generating a storm yet,” while Thomas Barkin from the Richmond Fed said that with unemployment low and consumer spending, it’s “hard to make a case for stepping on the gas.’’
Here’s what else is happening in the week ahead:
- S&P CoreLogic Case Shiller HPI, Tuesday, 9 a.m. EST
- NAR Pending Home Sales Index, Tuesday, 10 a.m. EST
- MBA Mortgage Apps – Wednesday, 7 a.m. EST
- Freddie Mac Primary Mortgage Market Index, Thursday, 10 a.m. EST
- Census Bureau Construction Spending Report, Thursday, 10 a.m. EST
- Bureau of Labor Employment Data, Friday, 8:30 a.m. EST