๐ข FED PRESS CONFERENCE INSIGHT โ JUNE 2025
Theme: ๐ง โPatience and Forecastingโ
The Fed kept rates steady at 4.25%โ4.50%, signaling caution despite softening inflation and stable growth. Chair Powell emphasized that policy is โappropriately positioned,โ but warned about unseen risksโespecially from tariffs.
๐ Shift in Strategy:
While inflation has eased, the Fed is no longer reacting solely to recent data. Instead, itโs prioritizing forecasts. In December 2024, rates were cut with inflation at 2.5%. Now, despite lower spot inflation, the 2025 forecast is 3.1%โdriven by rising trade tensions. Powell stated clearly: policy must move ahead of risk, not behind it.
๐ Diverging Views Within the Fed:
The latest dot plot shows internal division:
โ 7 members see no rate cuts in 2025
โ 8 project two cuts
The median forecast still implies a 50bps reductionโbut consensus is weak.
๐ท Labor Market Still Strong (But Fragile):
Unemployment at 4.2% is historically low. Real wages are growing. But Powell noted a fragile balance: layoffs remain low, yet job creation is slowing. If this shifts, unemployment could rise sharply.
โ ๏ธ Key Risks Ahead:
โ Tariff effects havenโt fully hit data yet
โ AIโs labor impact remains unclear
โ Budget cuts may reduce data quality
โ Middle East tensions are being monitored, though energy risks are โcontainedโ
๐ซ No Political Commentary:
Powell avoided questions about Trumpโs criticism or replacement rumors. His stance: the Fed will stay focused on price stability and employment.
๐ Whatโs Next?
Policy framework reviews and SEP updates are expected by late summer. Powell hinted at potential refinements but warned against unnecessary changes.
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Bottom Line:
The Fed isnโt rushing. Itโs positioning for long-term credibility, not short-term applause. Donโt expect aggressive rate cuts unless risks materialize more clearly.
#FedOutlook #MacroStrategy #MonetaryPolicy