03:28 PM EDT, 06/11/2024 (MT Newswires) -- The Federal Open Market Committee is again expected to make no change to the range of its federal funds rate target, keeping it at 5.25% to 5.5%, turning the focus to the post-meeting statement, updated economic and rate projections and Federal Reserve Chairman Jerome Powell's press conference for signals that fewer rate cuts are expected this year.

The FOMC's statement following Wednesday's meeting is due for release at 2:00 pm ET, with Powell's press conference scheduled for 2:30 pm ET.

The CME FedWatch Tool currently shows a 99.4% chance being priced in for no change in the federal funds rate and a 0.6% chance of the range being decreased by 25 basis points to a range of 5% to 5.25%.

The release of consumer price data for May at 8:30 am ET Wednesday will allow the FOMC to see the most up-to-date inflation readings.

Recent comments from Fed officials have indicated that the FOMC is content to be patient and wait for more confidence that inflation is slowing. Some have indicated that rate cuts could be seen in Q4, while others on the other side of the spectrum have said they cannot completely rule out the need for further rate tightening.

Markets have shifted their expectations for rate cuts as a result. The CME tool shows an 8.9% chance of a reduction in July, a 52.6% chance that rates will be lower by September, and a 67.2% chance of reduction by November. Currently, there is an 88.4% chance of lower rates by the end of the year, compared with 92.5% a week ago before the strong-than-expected May employment report.

The other key for this week's meeting is an updated Summary of Economic Projections.

In the March SEP update, the most recent available, the federal funds rate was seen at 4.6% at the end of 2024, suggesting 75 basis points of rate reduction or three cuts of 25 basis points each. With only four meetings left in the year after this week, it is likely that this estimate will need to be revised downward.

The median for the end-of-2025 funds rate was adjusted higher to 3.9% in March, 3.1% for 2026 and 2.6% for the longer term, suggesting a downward trend, though not as quickly as previously forecast.

Markets will also be watching for any discussion regarding the pace of reduction in its securities holdings. At the April 30-May 1 meeting, the FOMC slowed the pace of its reduction, but markets expect that it will need to be trimmed further at some point.

Powell's post-meeting press conference could provide some clarity on any changes to the SEP or the statement. Powell said in a speech on May 14 that it may take longer for restrictive monetary policy to impact inflation than previously expected, requiring the FOMC to keep rates higher for longer.

"Chair Powell will probably repeat the main messages he shared during his last press conference on May 1," Scotiabank Economics said in a research note. "At that time, he said 'so far this year the data have not given us that confidence' that dual mandate goals have been achieved which 'will take longer than expected.' He also shared cautious optimism that inflation would fall over the rest of 2024 and leaned against any appetite for resuming rate hikes."