"The Federal Reserve's 'Megaphone' Signals Before the Meeting: If Not for Tariffs, the Federal Reserve Would Lower Interest Rates This Week!"
"The Wall Street Journal" June 17, 2025, reported that he stated that if it were not for the risks that tariffs pose to prices, given the recent improvement in inflation, the Federal Reserve should have been prepared to lower interest rates this week. However, it is expected that Federal Reserve officials will continue to adopt a wait-and-see approach at the meeting on June 19.
The impact of tariffs on prices is mainly reflected in disrupting 'inflation expectations.' Although U.S. inflation data has been moderate over the past three months, the tariffs announced since March have raised officials' concerns that this could change consumers' and businesses' views on future inflation. Inflation expectations are crucial in determining actual inflation; if retailers, landlords, and workers expect future costs or expenses to rise, they may take actions such as raising prices or demanding higher wages in advance, thus driving actual inflation higher.
The market generally believes that the Federal Reserve will maintain the federal funds rate in the range of 4.25%-4.5% at this meeting. Whether the Federal Reserve will lower interest rates in the future and by how much will partially depend on how officials perceive the risks facing inflation expectations.
