A fourth straight meeting without a cut could provoke another tirade from President Donald Trump. But policymakers have been clear: Before they can make a move they need the White House to resolve the big question marks around tariffs, immigration and taxes. Israel’s attacks on Iranian nuclear sites have also introduced another element of uncertainty for the global economy.

At the same time, the generally healthy, if slowly cooling, US economy has few expecting a rate move any time soon. Investors are betting the central bank won’t lower borrowing costs until September at the earliest, according to pricing in futures contracts.

“The safest path to take in that situation, when there is no urgency to cut rates right now, is to just sit on your hands,” said Seema Shah, chief global strategist at Principal Asset Management.

Policymakers gather June 17-18. They’ll release a statement at 2:00 PM Washington time, and Powell is scheduled to take questions from reporters 30 minutes later.

Difficult Choices

The president’s tariffs are widely expected to raise prices and slow growth, risks that officials flagged in their last post-meeting statement. That could eventually force the Fed to make a difficult choice as the economy pulls them in opposite directions.

“I don’t think at this point there’s anything to be alarmed about,” said David Hoag, fixed income portfolio manager at Capital Group. “But the longer we have uncertainty — for the consumer, for companies in terms of planning — the more concerned I’ll get about the fundamentals of the economy deteriorating.”

So far, however, the economy isn’t flashing warning signs that would prompt the Fed to intervene.

The unemployment rate has held steady for three months even as job growth has slowed, in part because a sharp decline in immigration is also lowering the supply of workers. The longer the jobless rate remains stable, the longer the Fed can hold rates as a defense against potentially higher inflation.

Yet price data has also provided little to worry about. Underlying inflation rose by less than expected in May for the fourth straight month. Treasuries rose last week on the news, bolstered by wagers on more than one rate cut this year. The yield on two-year notes, most sensitive to the Fed’s policy, declined by more than seven basis points on the week to 3.96%.

Still, officials are likely to wait for additional months of data to understand how much of the tariffs are being passed on to consumers. Israel’s airstrikes on Iran will raise additional questions. Fed officials traditionally look through energy price moves, but an oil price shock could affect inflation expectations.

Fresh Projections

Fresh economic forecasts and rate projections this week could provide helpful guidance to how officials are thinking. They’ll be the first since Trump’s “Liberation Day” announcement of sweeping tariffs on April 2.

As analysts ponder the results, the range of possibilities is unusually large. 

If officials predict that unemployment will rise this year meaningfully above the 4.4% they forecast in March, that would suggest policymakers may cut rates before the fourth quarter, said Shah.

Some Fed officials, including Governor Christopher Waller, have already signaled an openness to cutting because they believe policymakers can view the expected impact of tariffs on consumer prices as temporary — as long as inflation expectations remain anchored. That aligns with market-based measures suggesting traders also believe the tariff price bump will be short-lived.

But should officials raise their expectations for inflation, that could reduce the number of cuts they project this year to one, from the two seen in March, said Matthew Luzzetti, chief US economist for Deutsche Bank. Strategists at Barclays warned of just such a “hawkish” surprise in a note to clients.

Officials might also consider the substantial uncertainty over the final state of Trump’s policies and simply leave their projections unchanged.

“I’d be surprised if the dots move much,” said Zachary Griffiths head of investment-grade and macroeconomic strategy at CreditSights. “It’s been a roller-coaster ride” since the Fed last released projections in March. “On net, I think we’re probably in a somewhat similar situation,” he said.  

Late Support

Some economists say the timing of the Fed’s next moves will eventually come down to how long it takes for Trump’s policies to show up in the economic data — and how strongly that raises concerns about a downturn.

In a Bloomberg survey of economists conducted June 6-11, 42% of respondents predicted the Fed will hold rates steady until there’s more concrete weakness in the economy.

Julia Coronado, founder of the research firm MacroPolicy Perspectives and a former Fed economist, said she expects rate cuts beginning in October or December in response to the more notable labor-market slowdown she estimates will materialize by then.