The Fed releases its latest interest rate decision Wednesday. Here's what to expect

• Market expectations and policymaker comments indicate virtually no chance of a rate change Wednesday, with the Fed taking a 'wait-and-see' approach as previous cuts work through the economy
• Political intrigue surrounds the meeting: Trump indicated he may announce Powell's replacement this week, potentially timed to coincide with the Fed decision, and the DOJ issued a subpoena regarding Fed headquarters renovation
• Analysts expect the Fed to maintain an 'easing bias' in its statement, signaling potential future cuts while upgrading economic growth assessments and removing language about employment downside risks

Federal Reserve Meeting Preview: No Rate Change Expected Amid Political Uncertainty

Key Decision: The Federal Reserve is virtually certain to hold its benchmark interest rate steady when its meeting concludes Wednesday, according to market expectations and policymaker comments. The Fed will maintain a "wait-and-see" stance as last year's rate cuts continue working through the economy.

Market Expectations: Futures pricing indicates one or two rate cuts likely in 2026—most probably in June and December. Markets will scrutinize Fed Chair Jerome Powell's press conference and the policy statement for guidance on future moves.

Political Intrigue: The meeting occurs amid unprecedented tensions between the Fed and the White House:

• President Trump indicated he may have selected Powell's replacement, with an announcement potentially coming this week
• The Department of Justice issued a subpoena regarding the Fed's Washington headquarters renovation, which Powell called a "pretext" to pressure rate cuts
• Fed Governor Stephen Miran's term expires Saturday; his status remains uncertain after dissenting from all three quarter-point cuts in 2025

Economic Context: Despite political pressure for cuts, economists note the data doesn't support aggressive easing. Recent labor market stabilization and solid economic activity support the pause, though inflation trends may allow continued easing bias.

Analyst Views:

• Former Fed Vice Chair Roger Ferguson: "They feel they've got time to wait and see"
• Morgan Stanley's Michael Gapen expects dovish tilt, retaining easing bias
• EY-Parthenon's Gregory Daco: "Fed has been politically pressured to cut rates, it is not pressed by the data"

Market Focus: Beyond rate policy, attention centers on whether Powell addresses political controversies and signals regarding the cutting cycle's continuation.