Federal Reserve's Harker: Fed may cut interest rates in June if economic data is clear

Cleveland Federal Reserve President Haamak said in an interview on Thursday that although a rate cut in May is unlikely, the Fed may take action at the next meeting in June if the economic data provide a clear and convincing direction. "If we get clear and convincing data before June, then I believe the committee will take action, provided that we are clear on the correct policy direction at that time," Haamak said when asked if a rate cut in June is possible. Her comments prompted a quick market response, with the probability of a rate cut in June briefly climbing to about 65% according to interest rate swaps, although it later retreated. Haamak emphasized that she did not set a "base case" to predict the most likely economic path. She believes that policymakers are unlikely to have enough information to make adjustments before the next Federal Open Market Committee (FOMC) meeting in early May. But if upcoming data provide more clues about economic growth and inflation trends, the Fed may take action in subsequent meetings. Haamak and several other Fed officials have reiterated recently that the current policy path will depend on data performance. Against a backdrop of high global policy uncertainty, they hope to wait for clearer economic signals before deciding on interest rate direction. She also mentioned that it is a time that requires "patience", "we want to make sure our policy direction is correct. This is a time for us to slow down and move forward steadily." She added that once the outlook is clear, "as you have seen before, the Fed can act quickly." Furthermore, Haamak also stated that there is still uncertainty regarding the direction of immigration, trade, and regulatory policies, which will also influence the pace and timing of policy making. The next FOMC meeting will be held on May 6th and 7th.