The Federal Reserve #FRS of the U.S. has so far decided not to jerk around with interest rates and keep them at the usual level, at least until September 2025. This is the fresh insight from a Reuters survey conducted from June 5 to 10, which consulted 105 economists. Almost all — 103 specialists — are confident that the Open Market Committee (#fomc ) will not budge and will maintain rates in the range of 4.25–4.50% at the meeting on June 17–18. Why is that? Because inflation still shows no signs of easing, and the labor market gives no indications of weakening that could prompt the Fed to move and change course.
The economic picture is still hanging in the air. Trade talks between the U.S. and China are still stalled, and the deadline for the temporary moratorium on tariff increases, scheduled for July 9, is already looming on the horizon. This truce, first initiated in April, is essentially at a standstill, and economists are looking at it with serious skepticism. At the same time, the Trump administration is not backing down and has further fueled the fire by raising tariffs on steel and aluminum from 25% to 50%, and markets have already started to understand that they will have to endure such frictions — and the charts are turning red.
Against the backdrop of this uncertainty, the House of Representatives recently pushed through a massive tax cut bill, which adds even more fog — as it has not yet passed through the Senate.
Despite intense pressure from Trump, who demanded a full percentage point cut — to bring rates down to the range of 3.25–3.50% — the Fed is not going to give in and change course. The central bank squinted and is carefully monitoring inflation expectations, which remain high, largely due to concerns that the U.S. will not calm down and will continue to build new trade barriers. UBS's chief economist, Jonathan Pingle, expressed it quite aptly:
"As long as the labor market remains robust and does not falter, we believe that the FOMC will hold its ground and even ramp up its rhetoric to emphasize its reputation as serious fighters against inflation. Until they see clear losses — why change the setup?"
He added that the current situation is more black-and-gray than simply gray — meaning that the problem is indeed real.
Of the 105 economists, 59 believe that rates will start to decline in the third quarter, most likely in September, while 44 think it will not happen until the fourth quarter or even later. Another 20 do not expect any cuts this year. Thus, while the majority hopes for a soft turn in the coming months, a significant part anticipates a prolonged pause.
BNP Paribas's chief economist in the U.S., James Egelhoff, is confident that inflation will remain on the agenda for a long time.
"High tariffs are like an anchor that will pull inflation up at least until 2026," he says. "The Fed is unlikely to rush into sharp downward moves on rates. Experience shows that once inflation takes root in the economy, uprooting it is a costly and tedious process."
In addition to inflation, the serious headache remains the U.S. national debt, which has already exceeded $36.2 trillion. The new tax-budget package currently in Congress will add about another $2.4 trillion to this amount. The bond market has already begun to digest this and react to new trends.
Comerica Bank's chief economist Bill Adams explains why #ФРС is in no rush to cut rates:
"Given the fresh fiscal stimulus, the Fed has simply fewer reasons to support the economy through low rates. This increase in the deficit will push long-term rates up, which will seriously complicate life for those dependent on loans — whether for housing or business investments."
The U.S. economy is, to put it mildly, not in the best shape. GDP fell by 0.2% in the last quarter, mainly due to a rising trade deficit, and the forecast for the whole year has been lowered from 2.8% to 1.4%. The forecast for next year is slightly better — 1.5% — and remains unchanged since May.
While American and Chinese officials continue to bargain in London, there are no clear signs of a forthcoming agreement before the moratorium on tariffs ends. Meanwhile, both economists and ordinary Americans are preparing for the fact that high prices will be with us for a long time. Inflation expectations are still far above the Fed's target level of 2%, and few believe that the situation will change before at least 2027.
By the end of 2025, most respondents — 85 people — are confident that the federal funds rate will remain at 3.75–4.00% or higher. No one is giving clear predictions on when the cuts will begin. It is clear only one thing: the Fed is not going to change course without good reason, and so far there are no such reasons — everything is still on pause.
