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The Federal Reserve is expected to keep interest rates at their target range of 4.25% to 4.5% when policymakers announce their decision at 2 p.m. ET on Wednesday.
The central bank is walking a fine line as its latest meeting concludes: It's facing uncertainty around President Donald Trump's tariffs and economy that shows some signs of resilience – take April's payrolls – as well as weakness – like the latest gross domestic product report.
Traders will listen closely to Fed Chair Jerome Powell as he takes the podium at 2:30 p.m., where they hope he will shed more light on if and when the central bank will cut rates. The Fed has been on hold since its last cut in December as it waits to evaluate the tariff impact.
Where markets stand before the Fed's announcement
The three major averages were in positive territory – albeit with the Dow Industrials and S&P 500 getting a boost from Disney – just before 1:30 p.m. ET.
The S&P 500 was up 0.46%, while the Dow surged 0.93%. The Nasdaq Composite was just above the flatline.
The U.S. 10-year yield traded at 4.287%, down about 3 basis points, while the rate on the 2-year note inched up by 1 basis point to 3.8%.
–Darla Mercado
Where key consumer rates stand before the Fed’s rate announcement
As the Federal Reserve prepares to announce its policy decision, consumer rates that are closely tied to the 10-year Treasury yield remain high.
The benchmark note yield is trading just below 4.3% as of midday Wednesday, up from the roughly 2% level where it traded during the week of March 11, 2022 – just before the Fed raised rates for the first time in this latest cycle.
Rates on the 30-year fixed-rate mortgage were around 6.9% as of the week of May 2, up from 4.29% in March 2022, according to data from MND. Credit card rates also remain high, hovering at 20.12% as of last week, compared to 16.34% in March 2022, per Bankrate data.
For consumers who are saving, the five-year annual percentage yield was at 1.69% last week, according to data from Haver. That's up from the 0.5% APY institutions were paying on these CDs in March 2022, but down notably from the 2.87% they offered last September.
–Nick Wells, Darla Mercado
The Federal Reserve will walk a tightrope as May meeting winds down
Central bank policymakers are widely expected to keep interest rates at their current range of 4.25% to 4.5% at the conclusion of their May meeting. Fed funds futures call for a nearly 98% likelihood that the Federal Reserve will stand pat on rate policy.
This meeting is notable because it comes a little more than a month after President Donald Trump rolled out a raft of tariffs, a move that jolted stocks and bonds in April.
Plenty of uncertainty lingers over how these levies will shape up, but Fed Chair Jerome Powell said last month that the duties could put the central bank in a crunch between reining in inflation and lifting economic growth.
Because of this shakiness, traders will be listening closely to Powell's press conference at 2:30 p.m., seeking clues on what could be next for rates.
Read more here from CNBC's Jeff Cox on what to expect from the Fed's rate decision.
–Darla Mercado
English (US)