What are the main events for today?

Today we don't have much on the agenda in terms of data releases except the final Eurozone CPI report which shouldn't change anything anyway. The focus is of course on the FOMC Policy Announcement due later today.

18:00 GMT/14:00 ET - FOMC Policy Announcement

The Fed is expected to keep interest rates steady at 4.50-4.75%. The recent Fedspeak has been leaning towards acknowledging some short-term uncertainty amid Trump’s policies but still seeing solid growth.

Fed Chair Powell in particular sounded very adamant on the current wait-and-see stance as he said that the cost of being cautious are very very low and that the central bank does not need to do anything right now.

The US CPI and PPI data last week despite coming in softer than expected increased the projections for the Core PCE which is the Fed’s preferred inflation measure. This will add to their reasons to remain on the sidelines for now.

The focus will be on the SEP and especially on the Dot Plot. The central bank is likely to revise growth expectations downwards and inflation expectations upwards. The market will also be eager to see if the central bank increases the projections from two to three rate cuts in 2025 which would give risk assets a boost. The market is currently pricing 59 bps of easing by year-end.

Regarding the QT, there's lots of discordant views but the consensus seems to be leaning towards an announcement of a slowdown in the pace of the Treasury bond run-off. The recent Fedspeak hasn't hinted to anything on this topic but last month we had Fed's Hammack preferring to keep the current pace in QT, while Fed's Logan was open for a slowdown.