Ankara: With the Federal Reserve's path forward on interest rates uncertain, world markets are holding their breath until Wednesday, when the next decision will come. Whether the Fed will cut rates remains to be seen amid ongoing uncertainties over trade disputes. Market expectations say the Fed will not cut rates until September. Experts with various views on the issue have tried to shed some light.

According to Anadolu Agency, James Knightley, chief international analyst at the ING Group, stated that the Fed is expected to maintain its policy rate. He noted that the US economy contracted by 0.2% in the first quarter, employment growth slowed, and inflation grew more moderate, all valid grounds for a rate cut. Knightley attributed the weakness in economic activity to tariffs leading to a decline in imports, as companies were attempting to avoid them. However, he observed that underlying demand remained strong, and a GDP growth of 4% could be seen with the easing of imports in the second quarter.

Knightley emphasized that "the Fed remains in wait and see mode," but he and others will closely watch the Fed's updated forecasts for indications on future actions. He remarked that the market is currently expecting two rate cuts for September and December, suggesting there is little pressure for the Fed to change its earlier forecast of 50 basis points of cuts this year and another 50 basis points in 2026.

Philip Marey, senior US strategist at Rabobank, shared his insights with Anadolu, predicting that the Fed will keep the target range for the federal funds rate unchanged at 4.25-4.50%. He mentioned that the new dot plot would reveal how many rate cuts the Federal Open Market Committee (FOMC) still expects to make this year and beyond. Marey highlighted the stagflationary effect of tariffs as a factor that will "pull the Fed in two opposite directions." Nonetheless, he maintained that their forecasts remain unchanged, anticipating only one rate cut in the second half of the year, most likely in September.