As of June 2025, the Federal Reserve FOMC meeting minutes show that the U.S. economy is facing a dual challenge of "persistent inflation" and "slowing growth". Policymakers generally emphasize the need for caution until the data becomes clearer. Here are the key analyses:

Policy Stance and Risk Trade-offs

The Federal Reserve has maintained the federal funds rate in the range of 4.25%-4.5% during its last two meetings (March and May), and the pace of balance sheet reduction has also slowed. Officials unanimously believe that the current economic outlook has "exceptionally high uncertainty", primarily due to the unexpectedly expanded tariff policies of the Trump administration, which may drive up the prices of imported goods and suppress demand, exacerbating the risk of "stagflation". If inflation remains high while the labor market weakens, the policy will face "difficult choices", and the timing of interest rate cuts may be postponed to the fourth quarter.

Inflation Pressure and Transmission Mechanism

The meeting minutes indicate that "almost all participants" believe that inflation may be more persistent than expected, as companies are passing on costs through tariffs and even taking the opportunity to raise prices. Although core PCE inflation has slightly dropped to 2.6%, the supply chain disruptions caused by tariffs could cause prices to deviate from the 2% target in the long term. Additionally, market volatility (such as the divergence in U.S. Treasury yields and the dollar's performance) may weaken the safe-haven status of U.S. assets and exacerbate upward pressure on long-term inflation expectations.

Future Path and Market Expectations

The Federal Reserve emphasizes that policy adjustments will strictly depend on data, focusing on the labor market, core inflation, and the impact of tariffs. The dot plot indicates that the median expectation for interest rate cuts in 2025 remains at 50 basis points, but the market is betting on 25 basis points cuts in both September and December. The June meeting may remain on hold, waiting for clearer economic data in the third quarter before taking action.

In summary, the Federal Reserve is finding it increasingly difficult to balance controlling inflation and stabilizing growth, and a shift in policy requires more certain signals. The short-term tone remains "cautious and watchful".