Since the last FOMC meeting, on March 19th, a great deal has happened – Liberation Day, bond market crisis, stock market crash, a tariff pause, stock market surge, sentiment slump but labor market and hard data surged… and trump has demanded rate-cuts… oh and China cut rates and flooded the zone with liquidity…

China’s central bank cuts key rates, injects 1 trillion yuan 3 hours after agreeing to trade talks to prop up economy and give communist party ammo for negotiations.

Tomorrow the Fed will do precisely none of that.

— zerohedge (@zerohedge) May 7, 2025

Gold has been a dramatic outperformer since March, stocks are rather shockingly unchanged-ish (after collapsing on Liberation Day), Treasury yields are higher, while crude has collapsed…

‘Soft’ data has collapsed since the last FOMC meeting while ‘hard’ data has improved…

Should Powell be pre-emptively cutting... like he did when financial conditions tightened ahead of the election…

The market is expecting only 3 cuts this year now (up from 2 cuts before the last FOMC)…

…and nothing from The Fed today…

And that’s what they got…

• *FED HOLDS BENCHMARK RATE IN 4.25%-4.5% TARGET RANGE

But risks have risen on both sides – raising the spectre of stagflation:

“The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.“

“The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.”

Uncertainty has risen:

“Uncertainty about the economic outlook has increased further.”

The new statement makes specific reference to trade’s impact on GDP in Q1…

“Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace.”

Read the full redline here…

And so all eyes and ears are now focus on what Powell says at the presser for Powell to explain the difference:

• Sept 2024: weak soft data, tight financial conditions, August market crash, cut rates by 50bps

• May 2025: weak soft data, tight financial conditions, April market crash, pause

Oh, one more difference: Sept 2024: Democrat President; May 2025: Trump President