As the Federal Reserve prepares for its upcoming meeting, attention is drawn to President Trump’s calls for interest rate reductions. He recently expressed his discontent over the central bank’s reluctance to cut rates, labeling their current stance as “TOO LATE AND WRONG.”

Current Expectations for the May Meeting

The Federal Open Market Committee (FOMC) is expected to announce its decision on interest rates on May 7. According to the CME Group’s FedWatch, there is a 97% chance that the Fed will keep its benchmark rate unchanged at 4.25% to 4.5%, a range it has maintained since a reduction last December.

Economic Landscape

The economic indicators present a mixed picture: While the U.S. GDP saw unexpected contraction in the initial quarter of the year, job creation exceeded forecasts in April. However, increasing recession risks are attributed to Trump-era tariffs, inflating costs on consumers.

Fed Chair Jerome Powell previously indicated a cautious approach, allowing time to assess the impacts of ongoing economic policies before making further rate adjustments.

Upcoming Meetings and Rate Predictions

The FOMC will reconvene on June 18, with a 70% likelihood of maintaining the current rate. Economists predict a stronger chance for a reduction during the subsequent July 30 meeting, with an 80% expectation of a rate cut at that time.

Some analysts believe that significant cuts may not occur until later, with potential adjustments in December, as inflation pressures from tariffs begin to ease and the labor market experiences further strain.

Trump’s Rationale Behind Rate Cuts

President Trump has advocated for a lower interest rate, arguing that inflation is under control and that high rates are no longer warranted. He recently stated on his platform, Truth Social, that “there is NO INFLATION,” emphasizing decreasing prices for groceries and fuel.

However, these claims have drawn scrutiny, with data showing that grocery prices have actually increased by 2.4% year-over-year, while gas prices remain above average, contrary to Trump’s assertions.

Implications for Consumers

Consumers hoping for lower borrowing costs may face extended waiting periods. Experts anticipate potential increases in credit card and auto loan rates as financial institutions react cautiously to economic uncertainties.

“There’s just so much uncertainty in the economy now,” highlighted Matt Schulz, chief consumer finance analyst for LendingTree. He pointed out that banks may elevate interest rates on loans to mitigate risk in an unpredictable economic climate.

Given these circumstances, consumers should actively seek competitive interest rates and consider transferring existing debt to lower-cost options where possible.