As global markets focus on this week’s US Federal Reserve meeting, the anticipation is not limited to the decision to hold interest rates—which most analysts agree on—but also extends beyond that: Is the central bank still committed to implementing two interest rate cuts this year as previously promised?

At the heart of these expectations lies the so-called “dot plot,” a chart released every three months that shows Fed members’ expectations for the future of the key interest rate. According to the most recent release in March, there was clear consensus among policymakers on two rate cuts this year, despite the uncertainty caused by President Trump’s economic policies.

But since then, new variables have entered the picture. The recent Israeli airstrikes inside Iran have raised fears of a prolonged war that could lead to higher oil prices and, consequently, renewed inflation, complicating the Fed’s mission. Former Kansas City Fed President Esther George stated that “this meeting will be all about the dot matrix,” stressing that the current situation is very fluid and may prompt the Fed to be cautious in adjusting its forecasts. Similarly, Luke Tilley, chief economist at Wilmington Trust, believes that the dot matrix is unlikely to see significant changes, saying: “I don’t think the narrative will change much. We’re on two cuts, and that trend looks set to continue.”

In contrast, US President Donald Trump continues to exert increasing public pressure on the Federal Reserve and its Chairman, Jerome Powell, to accelerate interest rate cuts. In provocative statements, Trump described Powell as “stupid,” hinting that he “might have to impose something,” although he emphasized that he would not fire him before his term ends in 2026. Trump sees low inflation as an incentive to ease monetary policy, but Powell and his colleagues remain concerned about the repercussions of tariff policies that could lead to a new wave of inflation. In this context, Gregory Daco, chief economist at EY-Parthenon, expects Powell to emphasize the risks of structural inflation resulting from tariffs, even if growth declines or the labor market slows.

However, there are signs of easing inflationary pressures. The personal consumption expenditures (PCE) price index—the Fed’s preferred measure—showed a slowdown in growth to 2.5% in April, down from 2.7% in March, bringing the central bank closer to its 2% target. At the same time, the labor market remains relatively strong, with unemployment holding steady at 4.2% and wage growth hovering around 4%. This balance leaves the Fed in a position where it sees no immediate justification for a rate cut.

Markets now expect the first rate cut to come as soon as September, with former Cleveland Bank President Loretta Mester saying uncertainty remains high about the scope and impact of the tariffs, so “the Fed needs more time and data.”

But some warn that excessive caution could cost the economy dearly. Tilly believes the Fed should leave the door open to a cut in July, especially with growing evidence of slowing growth. He noted, “Last year, they excluded July from the calculations at the June meeting, but they were forced to cut rates in September by 50 basis points after realizing they had delayed the decision.” At JPMorgan, Chief Economist Michael Feroli doesn’t expect a cut before December, explaining that Fed officials are “united in their desire to wait and see the impact of the tariffs before taking action.”

Although monetary policy is typically conservative, the general trend remains skewed toward easing, according to Esther George, who believes the Fed doesn’t want to shock markets with prematurely negative signals. She noted that Governor Christopher Waller and others are still hinting at the possibility of a cut this year. In conclusion, the Fed’s stance this week remains a crucial moment in determining the trajectory of the US economy for the remainder of 2025. Will the central bank stick to its promises? Or will the complexities of politics and geography force it to reconsider its course? Only the coming days will hold the answer.