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The Federal Reserve’s statement “sending a shot across the bow to the administration, saying essentially if you read between the lines, ’Your policies are leading to higher inflation, higher unemployment,” David Kelly, chief global strategist at JPMorgan Asset Management, said in an interview with CNBC’s “Power Lunch.”

“It says, ‘We are not going to be in any hurry to cut rates because honestly there are risks to both sides of our mandate here and we are not sure which way we should be playing this,’” he added.

Donald Trump’s administration is set to shrink the ranks at the top US financial regulators by more than 2,300 workers, a group that includes bank examiners, criminal investigators and economists.

The cuts are the steepest in decades for the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Securities and Exchange Commission, the primary agencies responsible for oversight of banks, trading houses and the public markets.

At the same time, the agencies are rapidly juggling their remaining staff and adjusting policies. The OCC has said it will combine supervision teams that were previously tailored to banks by size, and the SEC has reorganized its regional offices. The FDIC has yet to announce significant changes, but officials are rethinking its approach to bank supervision, according to people familiar with internal discussions.

President Donald Trump said he’s unwilling to preemptively lower tariffs on China in order to unlock more substantive negotiations with Beijing on trade.

“No,” Trump said Wednesday when asked by a reporter if he is open to pulling back his 145% duties on Chinese imports to get the world’s second-largest economy to the negotiating table.

The president’s comments come a day before Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer were set to meet with their Chinese counterpart on trade in Switzerland.

Stocks were little changed Wednesday after the Federal Reserve left its key interest rate unchanged, citing a greater increase in uncertainty around the economic outlook.

The S&P 500 lost 0.5%, while the Nasdaq Composite shed about 1%. The Dow Jones Industrial Average traded 27 points higher, or 0.1%, thanks to a 10% pop in Disney shares. The entertainment giant reported a surprise jump in streaming subscribers.

Stocks rose Wednesday as investors awaited the Federal Reserve interest rate announcement expected later in the day. Traders also monitored the latest updates on U.S. trade negotiations.

The S&P 500 added 0.3%, while the Nasdaq Composite shed 0.1%. The Dow Jones Industrial Average traded 295 points higher, or 0.7%, thanks to a 10% pop in Disney shares. The entertainment giant reported a surprise jump in streaming subscribers.

The US Federal Reserve on Wednesday (May 7) held its key interest rate unchanged as it awaits fluctuations in trade policy and the direction of a sputtering economy.

Shares of crop handler Andersons Inc. slumped to the lowest level in more than two years as uncertainty around tariffs and US port fees upended trade, pressuring first-quarter results.

Importers put off purchases of US grain and oilseeds as President Donald Trump threatened tariffs as well as levies on any Chinese vessels docking at American ports. While tariffs have been paused on some nations and most bulk agricultural cargoes will be exempt from the port fees, the developments still hit the Ohio-based company.

The trade uncertainty “disrupted typical grain flows and negatively impacted commodity values,” Andersons Chief Executive Officer Bill Krueger said Wednesday on a call with investors. “This resulted in limited merchandising activity beyond immediate customer needs.”

The US Federal Reserve’s Financial Stability Report, published in April 2025, noted that asset prices across several markets continue to stay high compared to underlying fundamentals.

The report flagged recent turbulence triggered by announcements on changes to US trade policy, which led to sharp price swings and increased volatility. It attributed this to investor concerns over how long and how far trade disruptions could go, as well as the potential economic slowdown and rising inflation. Despite these headwinds, the Fed said pricing remained elevated across multiple asset classes.

While the Fed has kept its benchmark rate unchanged since December, others are acting to shield their economies from escalating tariff-related risks.

China’s central bank reduced rates as factory production faltered under pressure from newly imposed 145% US tariffs. Europe is also leaning into stimulus with its central bank trimming rates three times this year, citing trade policy volatility as a key concern.

The Bank of England is expected to ease policy at its Thursday meeting, while Bank of Japan took a different path, holding steady this month after a rate hike in January, marking a rare divergence from the global shift toward monetary loosening.

US inflation, as measured by the Consumer Price Index (CPI) for All Urban Consumers, dipped by 0.1% in March 2025, after a 0.2% rise in February, according to data released by the US Bureau of Labor Statistics on April 10.

Core inflation, which excludes food and energy, edged up by 0.1% in March, following a 0.2% increase in the previous month.

On an annual basis, unadjusted CPI inflation stood at 2.4% for the 12 months ending March 2025.

Used car prices in the US surged in April, reaching their highest level since October 2023, as buyers rushed to make purchases ahead of potential tariff-related cost increases, CNBC reported.

Citing data from Cox Automotive, CNBC said the Manheim Used Vehicle Value Index — which measures wholesale used vehicle prices in the US — rose 4.9% year-on-year to 208.2. The index also jumped 2.75 points from March, a sharp rise compared to the typical monthly move of just 0.2%, according to the auto data firm.

At the March 2025 policy briefing, US Federal Reserve Chair Jerome Powell said the economy “seems to be healthy” despite a sharp decline in sentiment. He added that while activity hadn’t weakened significantly, the economic outlook was “unusually elevated” in terms of uncertainty.

Powell noted that the Fed was prepared to remain patient and observe how conditions evolve before deciding on further policy action.

Craig Chan, Head of Global FX Strategy at Nomura, says investors are becoming nervous due to shifting US policies. First, concerns focused on global risks and their impact on artificial intelligence. Later, the spotlight moved to trade rules and restrictions. Now, some are even questioning whether US treasuries could be taxed differently. All these changes have made investors less confident, leading many to reduce their US investments.

Federal Reserve Chair Jerome Powell will announce his policy decision at 11.30 pm (IST). Markets largely expect the Fed to keep interest rates steady for the third straight meeting, following a 25 basis point cut in December that brought the rate to 4.25%–4.5%.

According to the CME FedWatch Tool, there is almost no expectation of a cut in May, while the chances of a 25 bps reduction in June stand at about 30%.

According to the Financial Times, nearly every analyst they surveyed expects the same outcome: tariffs at current levels are likely to dampen growth and push up prices. The paper agrees with this consensus, noting that even though affluent US consumers still have some financial buffer, this may not be enough to fully curb inflationary pressure. In fact, higher prices could be on the way.

The FT also reports that a broader slowdown is becoming more probable. While a sharp rise in unemployment might be tempered by slower growth in the labour force, most analysts still anticipate joblessness could climb to around 4.8%. Though overall economic activity remains relatively firm, early signs of strain are visible—durable goods purchases have weakened, input costs are rising across sectors, and shipping data indicates a pullback in trade with China.

The US Federal Reserve will announce its interest rate decision on Wednesday, May 7, 2025, at 2:00 p.m. Eastern Daylight Time (EDT), which corresponds to 11:30 p.m. Indian Standard Time (IST) the same day.

Catch all the live updates on Jerome Powell’s address here

US Treasury Secretary Scott Bessent, in testimony before the House Financial Services Committee on Wednesday, declined to share details on the status of ongoing trade negotiations, citing the sensitivity of the discussions.

Responding to a question from Representative Nydia Velázquez, Bessent said, “It would be detrimental to the interest of the United States,” adding that talks may still be underway. “We are not at the end of the week yet,” he said.

Bessent is expected to travel to Switzerland on Thursday for a key meeting with Chinese officials, joined by US Trade Representative Jamieson Greer.

Of the 18 trade agreements under negotiation, Bessent said several are in “quite advanced” stages but clarified that any initial pacts would be “agreements in principle” and would take months to finalise. (Source: CNN)

Goldman Sachs expects the US Federal Reserve to cut rates in July, September, and October, per a CNBC report.

“We think it will take a couple of months for enough hard data evidence to accumulate to make the case for a cut,” Goldman Sachs economist David Mericle said in a note.

The firm expects inflation concerns to take priority over economic weakness.

The Federal Reserve is expected to announce its latest monetary policy decision at 11.30 pm IST. CNBC reports that Fed funds futures are pricing in a near-certainty that the central bank will hold the borrowing rate steady.

The major averages experienced a decline from their recent highs after Treasury Secretary Scott Bessent clarified that the trade talks scheduled for this weekend in Switzerland with Chinese officials would primarily be preliminary. Initially, news of these discussions had given equities a boost.

Traders will closely monitor Fed Chair Jerome Powell’s post-decision press conference for valuable insights into the potential trajectory of interest rates in the future. This announcement comes at a critical juncture for the central bank leader, who has faced criticism from US President Donald Trump, who has expressed his desire for his “termination to come swiftly.”

Bank of America upgraded Honeywell International’s shares to a buy rating from neutral. Analyst Andrew Obin also lifted his price objective for the conglomerate to $250 from $210. Honeywell shares have shed 7% in 2025, but Obin’s updated forecast is approximately 19% above the stock’s Tuesday closing price.

Stocks remained relatively unchanged on Wednesday as investors eagerly awaited the Federal Reserve’s interest rate announcement later in the day. Traders also closely monitored the latest developments in US trade negotiations.

The S&P 500 and Nasdaq Composite both experienced slight fluctuations, while the Dow Jones Industrial Average experienced a modest 0.4% increase, driven by a 10% surge in Disney shares. This surge was attributed to Disney’s surprising jump in streaming subscribers.

The Federal Reserve is scheduled to announce its latest monetary policy decision at 11.30 pm IST.

Warren Buffett, with 18,000 trading days of experience, dismisses recent market volatility as insignificant compared to historical downturns. He emphasises the importance of a long-term investment philosophy, highlighting that short-term fluctuations should not deter investors. Buffett advises against panic and suggests adopting a diversified portfolio and consistent investment strategy, regardless of market conditions.

The US dollar index strengthened slightly against other major currencies, gaining 0.1% to 99.45, while US 10 year Treasury bond yields eased to 4.30% from 4.32%.

According to HSBC, bond yields are likely to move lower. “I don’t think the 10-year yield will break above 4.50%. When it hit 5% last year, policy rates were 100 basis points higher than now. With current rates and expectations of easing, it’s hard to see the 10-year going above 4.50%,” Steven Major, Global Head of Fixed Income at HSBC told CNBC-TV18.

Steven Major, Global Head of Fixed Income at HSBC, forecasts three rate cuts by the US Federal Reserve this year, followed by two more in 2026.

Major explained that while the Fed’s own projections suggest more cuts could happen, it’s also about probabilities. “It’s like saying there’s a 50% chance they cut six times, and a 50% chance they don’t cut at all,” he noted.

Matt Orton, Chief Market Strategist at Raymond James, is cautious about the near-term market outlook despite the recent rebound.

“In the short term, I am a little bit cautious… and that is largely because a lot of good news has already been priced in,” he said.

He believes that even as fears around tariffs have begun to ease as the US administration appears more responsive to market reactions, there are overly optimistic rate cut expectations that might lead to a temporary pause in momentum.

Ed Yardeni, President of Yardeni Research, does not expect any interest rate cuts from the US Federal Reserve anytime soon, as the economy remains strong.

“I have been in the ‘none and done’ camp,” Yardeni said, explaining that there is no need for the Fed to act right now. Data on payroll numbers and inflation indicate signs of resilience, and he believes the tariff uncertainties are unlikely to change the Fed’s wait-and-watch approach.

Fitch Ratings has significantly lowered its US economic growth estimate for 2025 to 1.2%, down from 2.8% last year, and says an interest rate cut from the Federal Reserve is unlikely in the near term.

“The Fed will likely wait until the fourth quarter before cutting rates,” said Brian Coulton, Chief Economist at Fitch. He cited rising inflation pressures from new tariffs and added, “We have US inflation heading above 4% by year-end.”

Coulton also warned that growing household inflation expectations could make it harder for the Fed to ease policy without risking its credibility.

Stocks moved higher on Wednesday as investors kept an eye on US trade developments and awaited the Federal Reserve’s rate announcement later in the day.

The Dow Jones Industrial Average rose 213 points, or 0.5%, while the S&P 500 added around 0.4%. The Nasdaq Composite was up about 0,3%.

Taimur Baig, Chief Economist at DBS Group Research, says those expecting a rate cut may be misreading the Fed’s room to act. He argues that sticky inflation, not recession, is the bigger concern.

“US producers are clear in their signalling. They will raise prices. They are raising prices,” Baig told CNBC-TV18, pointing to tariff-driven cost pressures and supply chain challenges that complicate the Fed’s ability to ease.

While recent growth data looked weak, Baig said it was likely distorted by import frontloading ahead of new tariffs. He expects the US economy to grow between 1.5% and 2% in the first half of 2025. “I don’t think the US economy is about to crater,” he added.

Recent data suggests that inflation in the US is easing gradually—a positive sign that now faces new risks from the Trump administration’s fresh round of tariffs, which could undo progress by driving prices back up.

The labour market remains strong, with April figures showing a gain of 177,000 jobs, giving the Fed reason to stay patient. But growing concerns that the new tariffs could dampen economic momentum are adding to the uncertainty around the Fed’s path ahead.NewsLive TVMarketPopular CategoriesCalculatorsTrending NowLet's Connect with CNBCTV 18Network 18 Group :©TV18 Broadcast Limited. All rights reserved.