Key Highlights:

• The FOMC is widely expected to leave rates on hold, but as noted in our week ahead preview, we could see dissents from both Governor Waller and Governor Bowman given their recent commentary – something that hasn’t happened since 1993 – at a time when political pressure on Chair Powell is intensifying. 
• Other Fed policymakers have largely toed a patient, wait-and-see approach due to the uncertainties of the tariff impact and delayed imposition of tariffs, with new tariff rates not set to come into force until August 1st.
• While tariffs on China were set to come into effect on August 12th, talks early this week are looking to extend that deadline by at least 3 months to avoid tariffs of 145% on the US side and 125% on the Chinese side.
• Attention at the press conference will be on Chair Powell, to see if he offers any guidance for rates ahead, or if it may soon be time to lower rates, depending on the data, although the Fed has been reluctant to commit to future moves in the past, given the ongoing uncertainties around trade policies.
• During the Press Conference, Powell will also likely be quizzed about his future given President Trumpʼs continuing criticisms of the Fed Chair. Powell tends to avoid these sorts of questions, usually stating that he is focused on the Fed’s mandate.
• The press conference may also see Powell quizzed on the accuracy of recent data, with an increasing number of economists worried about the accuracy and whether it could distort Fed policy.

EXPECTATIONS: The Federal Reserve is widely expected to keep rates on hold in July, with the latest Reuters Poll finding all 105 economists surveyed looking for this outcome. Money markets are also largely pricing in a hold, with just a 3% probability of a 25bps rate cut.