Fed Officials Weigh Statement Wording as Geopolitical Risks Cloud Rate-Cut Outlook

BlockBeats reports that a two-day Federal Reserve policy meeting will wrap up early Thursday Beijing time, according to Wall Street Journal's Nick Timiraos, often dubbed the Fed's "voice." The gathering is described as the last meeting chaired by Jerome Powell before he steps down. Investors largely expect the Fed to keep interest rates unchanged. The main focus is whether policymakers indicate that rate cuts are no longer on the table or simply postponed. An energy shock tied to the Iran conflict, alongside multiple supply disruptions, has revived stagflation concerns. The Fed is expected to hold its benchmark rate in a 3.5% to 3.75% range, while internal debate intensifies over how to adjust the policy statement and the trajectory for potential easing. Timiraos wrote that the U.S. is facing its fourth supply shock in five years, following the post-pandemic reopening, the Russia-Ukraine war, the "tariff war," and the current Middle East conflict. Fed Governor Christopher Waller, who previously supported three rate cuts last year amid labor-market concerns, has shifted toward a more cautious stance as inflation risks rise. Although fighting involving Iran has ended, the Strait of Hormuz remains effectively blocked, pushing jet fuel prices higher. Fed officials now expect inflation to take at least another year to return to the 2% target. A central issue for the committee is whether to revise the official statement in a way that suggests rate cuts are no longer being considered. Since late last year, the statement has included language implying the next move is more likely a cut than a hike. At the past two meetings, a minority of officials pushed to remove that phrasing to signal more balanced odds between cuts and hikes. Timiraos noted the prevailing view is that changing the language now would be too forceful, as a formal shift could tighten financial conditions—a hawkish move most officials are not yet ready to make. The committee is expected to revisit the wording debate again this week. (Kitco)