Pulais: Expects the Federal Reserve to maintain interest rates this month, with a possible rate cut in October
Blerina Uruci, Chief U.S. Economist at Plante Moran, expects the Federal Reserve to maintain interest rates at 4.25% to 4.5% in the upcoming FOMC meeting and may cut rates in October. She noted that although inflation remains stubborn, it is not enough to prompt FOMC hawkish officials to shift their stance. The market may interpret this as a dovish signal, anticipating two rate cuts in the future. She believes that the current monetary policy is too tight, and the likelihood of a rate cut in October is higher than in September
According to the Zhitong Finance APP, at the upcoming Federal Open Market Committee (FOMC) meeting, Blerina Uruci, Chief U.S. Economist at Pruis, stated that the FOMC is expected to keep interest rates unchanged at 4.25% to 4.5%. The most noteworthy aspect of this meeting is that Governors Waller and Bowman may hold dissenting views, which is her baseline expectation. The market is likely to interpret this as a dovish signal and further speculate that the pace of interest rate cuts will accelerate after more Trump-appointed governors join the Federal Reserve Board in the first quarter of 2026.
Regarding the outlook for the Federal Reserve, Blerina Uruci mentioned that the latest data shows inflation is more stubborn than expected, but it is not enough to cause FOMC hawkish officials to suddenly shift their stance at the July meeting. She believes that Chairman Powell and most FOMC officials want the market to continue expecting about two rate cuts this year to maintain policy flexibility while providing a political buffer to address the increasingly confrontational attitude from the White House. Dovish officials within the committee (Governors Waller and Bowman) may argue that tariff-related inflation has been offset by other factors and, citing a neutral interest rate close to 3%, support rate cuts by arguing that current monetary policy is too tight.
She pointed out that since the June FOMC meeting, the balance of risks for economic growth and the labor market has turned positive, and the impact of tariff effects on inflation has been confirmed, with reduced economic downside risks and a continued weak dollar, leading to a slight upward bias in inflation risks.
Looking ahead for the remainder of this year, she expects inflation to remain stubborn, and given that the inflation outlook is in a delicate balance, a hasty rate cut could be seen as a policy mistake. She believes that Chairman Powell will attempt to guide the committee to delay the next rate cut, and she sees a higher likelihood of a rate cut in October than in September
