Since the last FOMC meeting (on March 18), gold has been clubbed like a baby seal ("EM piggy bank") while stocks and oil have surged (with the former ignoring the peril of the latter)...

During that time, Fed rate-change expectations have swung violently from a full rate-cut to a full rate-hike and fallen back to no change at all in 2026, notably (hawkishly) rising in the last few days as oil prices surged back to war highs...

On the macro front, The Fed's dual mandate is in play as (surprisingly) inflation has surprised to the downside while growth has surprised to the upside...

Notably, The Fed doesn't need to cut rates today for monetary policy to get easier as inflation expectations are rising so much that ex-ante real rates have fallen to the lowest since November and are close to turning negative...

As we detailed earlier, recent labor data (March jobs, ADP, claims) has shown resilience and potentially some green shoots. To Bank of America, this should reduce the sense of urgency to shore up the labor market among the doves.

But, as a result of latent inflation threats, some of the most prominent doves on the committee have changed their tone of late. In a speech last week, Waller emphasized not only upside risks to inflation from the Iran war.

Nevertheless, with all that behind us, the market is expecting a big fat nothingburger from Fed Chair Powell's last (maybe) FOMC meeting, but is expecting an indication of 'two-sided risks' with a single dissent (from Miran calling for a 25bps cut).

What The Fed Did and Said...

Most divided Fed in 34 years votes to hold rates unchanged as expected BUT... With 4 No Votes, Powell's Final Meeting Garners Most Dissents in 34 Years

• *FED: HAMMACK, KASHKARI, LOGAN VOTED AGAINST EASING BIAS, BACKED

• *FED SAYS GOVERNOR STEPHEN MIRAN DISSENTS IN FAVOR OF RATE CUT

Fed officials also changed slightly their characterization of the uncertainty around the conflict in Iran: 

“Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook.”

Back in March they said the implications for the US economy were “uncertain.”

In the spirit of Fed transparency, Powell leaves on a confusing note.

So, three of the dissenters opposed “inclusion of an easing bias.”

And yet the actual language of the statement arguably doesn’t specify such a bias.

It says that the committee would be prepared “to adjust the stance of monetary policy as appropriate.”

That doesn’t specify cutting interest rates.

Fed officials said the economy is expanding “at a solid pace” with “low” job gains and the unemployment rate “little changed”. That’s all the same as in March.

Their characterization of inflation changed slightly:

“Inflation is elevated, in part reflecting the recent increase in global energy prices.”

However, as Bloomberg notes, in central bank world every word matters, and there has been extensive debate around the characterization of “additional adjustments.” Some Fed watchers deem the wording as signaling most policymakers still see a rate cut as their next likely step, in what’s known as an easing bias. That bias stayed unchanged today:

“In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”

Read the full red-line of The Fed statement below: