Kevin Powell's first Federal Reserve interest rate meeting has drawn intense scrutiny, yet market consensus indicates minimal policy adjustment in the immediate horizon. Early Thursday morning Beijing time, the central bank will release its latest decision, with a CNBC Fed Survey revealing that 32 economists, fund managers, and strategists anticipate no rate changes at this meeting or any subsequent gathering before 2027.

Concurrently, 88% of respondents predict the removal of 'dovish bias' language from the statement, a significant shift indicating that the market's previous bet on a rate cut has effectively vanished from the near-term outlook.

High inflation remains the primary driver for this policy stagnation, exacerbated by the Trump administration's tariff policies and ongoing US-Iran tensions. While Powell is widely perceived as a dove, he inherits a committee with a distinctly hawkish orientation, where officials have publicly argued that rate hikes must remain an option if inflation persists above target. Data compiled by Woofun AI shows that respondents' forecasts for the federal funds rate remain anchored at the current 3.62% level through 2027. Although elevated oil prices introduce inflationary pressure, the prevailing view is that these factors will not trigger an immediate rate hike.

Gregory Daco, Chief Economist at EY, emphasizes the structural shift within the committee, noting that several policymakers advocate for maintaining the option of rate hikes to combat energy-driven inflation. Powell has acknowledged that rates could be lower, but recent inflation rebounds and robust employment data have prevented him from clarifying any adjustment to his outlook. Following the survey, reports of a potential US-Iran agreement emerged, which might create operational space for an earlier rate cut, though this possibility remains uncertain. Woofun AI notes that the divergence between Powell's personal stance and the committee's collective hawkishness creates a complex dynamic for future policy decisions.

John Ryding, Chief Economic Advisor at Brean Capital, adopts a more aggressive stance, arguing that the FOMC should raise rates to curb rising inflation expectations and align policy closer to a neutral level. Guy LeBas, Chief Fixed Income Strategist at Janney Montgomery Scott, reinforces this view by highlighting that short-term labor market fragility has passed, tilting the central bank's dual mandate significantly toward inflation control. Despite the tight interest rate outlook, improved economic fundamentals offer a favorable backdrop for Powell's succession, with survey participants raising 2026 US GDP growth expectations to 2.2%, a 0.25 percentage point increase from the previous survey.

The 2027 GDP outlook stands at 2.3%, recovering most of the earlier downward revisions prompted by US-Iran tensions. The probability of a recession has declined from 33% in April to 25%, while unemployment rate expectations for the next two years remain stable around the current 4.3% level. Economist Hugh Johnson observes that improved economic and employment conditions, coupled with modest stock market gains, characterize the current phase of the stock market-economy-interest rate cycle, with no early warning signs of a bull-market-ending recession yet visible. Many respondents believe the healthy job market necessitates a renewed focus on the inflation target, which has largely eluded the Fed over the past six years.

Beyond monetary policy, Powell's push to reform the Fed's communication strategy has garnered substantial support. The survey indicates that 59% of respondents believe Fed officials speak too much, with only 38% viewing the current volume of speech as appropriate, aligning with Powell's desire to reduce public remarks.

However, a contradiction exists as 59% of respondents still expect Powell to hold a press conference after each meeting, conflicting with his refusal to commit to this during the April Senate confirmation hearing. Regarding the 'dot plot,' 53% of respondents advocate for its complete elimination, rejecting various reform proposals such as delayed releases or tying dots to specific economic forecasts.

The survey ranks inflation as the primary risk to growth, closely followed by the potential burst of an AI bubble. Woofun AI analysis suggests that 84% of respondents believe AI stock valuations are excessive, a 6-percentage-point drop from December, with an average overvaluation of approximately 21%.

Additionally, 69% view the overall stock market as overvalued, though this figure represents the lowest level in nearly a year. Drew Matus, Chief Market Strategist at MetLife Investment Management, warns that the disconnect between reality and AI expectations poses a risk to the stock market and consumers reliant on the wealth effect, which could become a transmission channel for the next economic downturn.

Interviewees maintain a conservative outlook on the stock market, projecting the S&P 500 to approach 8,000 by 2027, representing a growth of about 5.5% from current levels. Conversely, concerns regarding credit market risk have eased significantly. Currently, only 53% of respondents perceive a 'slight increase' in credit market systemic risk, down from 75% in March, with an additional 3% believing the risk has 'increased significantly.' John Donaldson, Head of Fixed Income at Haverford Trust Co., states that despite some pessimistic forecasts, credit markets do not face widespread threats, with any softness limited to CCC and CC-rated credits and no signs of pressure on credit spreads within the financial sector.