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WHAT DOES THE FED SAY? WAIT AND SEE

Federal Reserve officials had plenty to say in Monday's public appearances but investors hoping for clarity on the direction of interest rates will have to wait.

Some touched on Moody's downgrade of the U.S. sovereign credit rating by a notch, late on Friday, due to concerns about the nation's growing, $36 trillion debt pile.

Atlanta Federal Reserve Bank President Raphael Bostic spoke to CNBC on Monday and said the downgrade will have implications for cost of capital which could ripple through economy.

Fed vice chair Philip Jefferson said at a conference that the central bank will put the downgrade in the same perspective as all incoming information while it focuses on its dual mandate of maximum employment and price stability.

With the impact of tariffs as top of mind and given the uncertainty around them, Jefferson said it is appropriate to wait and see on rate decisions.

The U.S. could face a one-time increase in the price level from tariffs so the Fed needs to keep policy in a place to be sure inflation expectations remain anchored and to make sure there isn't a sustained increase in inflation, he said.

Bostic said on Monday that uncertainty surrounding Trump administration policies has put the economy into a "big pause," so the U.S. central bank should stay on hold until there is more clarity.

With this, Bostic said the central bank may only be able to cut rates by a quarter point over the rest of 2025 due to concerns about rising inflation stoked by higher import tariffs.

"I am leaning much more into one cut this year," Bostic said in comments to CNBC.

Meanwhile, traders are definitely hoping for more than one cut by the end of this year pricing in about 50 basis points (bps) of cuts from the Fed, according to LSEG data.

Elsewhere, Fed Bank of New York President John Williams added some reassurance if not clarity on rates.

Before a Mortgage Bankers Association gathering Williams said central bank interest rate policy is in the right place to deal with an uncertain economic outlook and can take its time before deciding its next interest rate move.

“The economy is doing very well,” at the moment amid some signs in recent numbers there could be trouble ahead, he said.

(Sinéad Carew)

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MONDAY'S EARLIER LIVE MARKETS POSTS:

MOODY'S DOWNGRADE RAMIFICATIONS: DAMPENED APPETITE FOR TREASURIES, INTENSIFIED FISCAL POLICY PRESSURE CLICK HERE

LEADING ECONOMIC INDEX POSTS BIGGEST MONTHLY DROP IN OVER TWO YEARS - CLICK HERE

WALL ST SLUMPS ON MOODY'S DOWNGRADE AS LAWMAKERS WRANGLE TRUMP TAX BILL - CLICK HERE

U.S. FUTURES POINT TO DROP AT THE OPEN AFTER MOODY'S DOWNGRADE - CLICK HERE

ARE EUROPEAN EQUITY VALUATIONS HIGH? - CLICK HERE

THE DOLLAR'S FISCAL FROWN - CLICK HERE

FEES POWER BANK BEATS - CLICK HERE

LOWER BUT CALMLY - CLICK HERE

LOTS GOING ON, EUROPEAN FUTURES OUTPERFORM - CLICK HERE

MORNING BID: SO, CHINA SHOULD CONSUME MORE AND THE US LESS? - CLICK HERE

(Reporting by Chuck Mikolajczak)

((charles.mikolajczak@tr.com; @chuckmik.bsky.social;))