April FOMC Interest Rate Meeting

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At 2:00 AM Beijing time on April 30 (Thursday), the Federal Reserve will announce the latest interest rate decision from the April FOMC meeting, followed by a press conference with Fed Chair Jerome Powell at 2:30 AM.The market widely expects no change in policy this time, with the federal funds rate target range remaining at 3.5%-3.75%.As of April 26, CME FedWatch data shows a 100% probability of maintaining rates unchanged in April, while the probability of a cumulative 25 basis point rate cut by June is 4.9%.

However, this is not expected to be a 'boring' meeting.

On one hand, the annual increase in U.S. CPI jumped from 2.4% in February to 3.3% in March, rising 0.9% month-on-month, marking the largest single-month gain since June 2022.The ongoing situation in the Middle East continues to push up energy prices, bringing inflationary pressures back into focus.Market expectations for rate cuts within the year have clearly cooled. According to LSEG data, traders now expect cumulative rate cuts by December to be less than a standard 25 basis points; whereas before the U.S.-Iran conflict erupted at the end of February, markets were anticipating at least two rate cuts.Against this backdrop, how Fed officials assess new risks facing the U.S. economy and their latest views on the interest rate path are worth watching.

On the other hand,This is very likely the last press conference Jerome Powell will attend as the current Fed Chair, with his term officially ending on May 15.As the U.S. Department of Justice terminated the criminal investigation into Powell regarding the headquarters renovation costs on April 24,A key obstacle in Kevin Warsh’s nomination confirmation process—Senator Tillis from the Senate Banking Committee—has been largely cleared.Data from the prediction market Kalshi on that day showed the probability of Warsh being confirmed by May 15 rose from 30% to 84%.

At the Senate confirmation hearing held on April 21, Warsh systematically elaborated on his policy proposals for the first time, clearly stating that if appointed, he would act as an 'independent decision-maker,' emphasizing 'The president has never asked me to commit to a rate cut at any specific meeting, and I would never do so.'

As the farewell countdown begins,Uncertainties brought by escalating Middle East tensions over oil prices and inflation, resilient economic data, and divisions within the Fed regarding future interest rate paths,Will all rest on Powell's shoulders during this 'final dance.' The market will be highly focused:

> How the Middle East situation affects the Fed’s risk assessment:The Fed’s March meeting minutes already mentioned the option of resuming rate hikes; if energy prices remain high and inflation continues to rise, will geopolitical conflicts in this statement become a new variable delaying or even reversing the rate cut path?

> Subsequent signals on balance sheet management:This round of quantitative tightening (QT) has smoothly concluded by the end of 2025, with the balance sheet shrinking by over $2 trillion from its peak of nearly $9 trillion.However, the market is still focused on the long-term target size of the balance sheet. In Wash's hearing remarks, he repeatedly emphasized that balance sheet reduction itself has a tightening effect, which can provide policy space for rate cuts.Will this meeting provide clearer forward guidance on the future path of the balance sheet’s size? Will Wash’s proposition of 'balance sheet reduction and rate cuts proceeding simultaneously' be reflected?

> Powell's Farewell Hint:Unless unexpected, this will be Powell’s last interest rate decision meeting as chair. Will he give clear guidance on whether and when to cut rates this year? What kind of policy baton will he leave for his successor?

Dear fellow investors, feel free to tune in and watch, let’s witness this key moment together!

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