US stock futures showed a slight decline as traders prepared for the conclusion of the Federal Reserve’s two-day policy meeting, which is widely anticipated to include the first interest rate cut of 2025.
Futures linked to major indices, including the Dow Jones Industrial Average, the S&P 500, and the tech-heavy Nasdaq 100, all dipped by 0.1%. Wall Street is largely expecting the Fed to announce a rate cut on Wednesday at 2:00 p.m. ET, with analysts believing that a slowdown in the labor market will persuade policymakers to act, even amidst rising inflation. The market is currently pricing in a 96% probability of a 25 basis-point cut and a 4% likelihood of a larger reduction.
While a rate cut seems almost certain, the future path of interest rates remains uncertain. Investors are keenly looking forward to the release of the Fed’s “dot-plot,” which will provide insights into the number of rate cuts the central bank expects throughout the rest of 2025. Additionally, Fed Chair Jerome Powell’s comments during a press conference following the decision, scheduled for 2:30 p.m. ET, will be closely monitored by market participants.
This anticipated move comes amid rising concerns regarding the independence of the Federal Reserve. President Trump has openly criticized Powell while simultaneously exerting more direct influence over the Fed’s governance. A Republican-controlled Senate confirmed Trump’s nominee, Stephen Miran, to the Federal Reserve Board in a narrow vote on Monday evening. Miran has stated he will not resign from his role as a White House advisor, opting for a leave of absence instead, intending to return later.
Meanwhile, an appeals court on Monday dismissed Trump’s efforts to remove Fed governor Lisa Cook due to alleged mortgage fraud, meaning she will continue in her role and contribute to policy discussions as legal proceedings continue.
On Tuesday, stock prices softened as investors focused on Federal Reserve policy. In other news, recent retail sales data revealed stronger-than-anticipated figures, although retailers have reported shifting consumer habits.
Looking ahead to Wednesday, alongside the Fed’s policy decision, investors will also receive new housing start data and earnings reports from General Mills and Cracker Barrel. Cracker Barrel was recently in the spotlight due to controversy surrounding its now-shelved logo change.
As the week progresses, discussions between President Trump and Chinese President Xi Jinping are expected on Friday to cover trade and the popular social media platform TikTok.
In Asian markets, shares were mixed following a decrease in tariffs on Japanese goods and heightened expectations regarding the Fed’s rate cuts and their impact on global trade.
