Fed Likely to Hold Rates Steady But Markets Watching for Signs of Shift on Future Cuts

Fed expected to maintain interest rates at 5.25%-5.50% at upcoming FOMC meeting, but all eyes on updated projections and Powell's comments
Two high inflation reports this week have lowered expectations of a June rate cut; market implies only 60% chance now
Former Fed hawk Bullard says Fed risks damaging economy if they delay rate cuts; says policy should be nearing neutral when inflation is within 50 bps of 2%
BofA strategist Hartnett suggests Fed tolerating higher inflation, which eases U.S. debt burden but could hurt policy credibility
Surveyed economists expect Fed to stick to plan of 3 rate cuts in 2024 and 4 in 2025, despite uptick in inflation