#FOMCMeeting On June 17-18, 2025, the Federal Open Market Committee of the U.S. Federal Reserve held its regular two-day meeting to assess the current economic situation and decide on the path of interest rates. This session was marked by several external and internal factors that influenced monetary policy makers' deliberations:
Conditions of the U.S. economy before the meeting
Data from May showed a slowdown in retail sales and industrial production, raising concerns about a decline in economic growth and potentially entering a mild recession, while the unemployment rate remained low at around 3.5%, providing partial support for domestic demand.
Geopolitical tensions and their impact on monetary policy
The period leading up to the meeting saw rising tensions between Israel and Iran, which temporarily pushed oil prices higher and brought back to the forefront the risks of imported inflation, a major concern for participants in the FOMC meeting.
Expectations before the interest rate decision
Analysts reached a consensus that the interest rate would remain unchanged in the range of 4.25–4.50%, with a likelihood of reducing the number of expected rate cuts for 2025 in the accompanying 'dot plot' of the economic projections summary, in light of increasing risks to inflation and growth.
Meeting outcomes and press announcement
On June 18, the committee announced that it would keep the interest rate unchanged, with a slight modification in the statement emphasizing 'the need to monitor the impact of tariffs and geopolitical tensions on inflationary conditions.' It stressed that any future policy change would be driven by new economic data.
Federal Reserve's forward guidance and tone
In the press conference, the Federal Reserve Chairman indicated that the committee intends to adopt a 'wait-and-see approach' to assess the effects of trade policies and actual price data, hinting that the first interest rate cut may be delayed until after September instead of mid-year as previously expected.
Reactions from financial markets
Immediately after the decision was announced, U.S. Treasury futures experienced slight volatility, while the S&P 500 index rose by 0.8% driven by the committee's reaffirmation of support for growth. In the currency market, the U.S. dollar rose by about 0.5% against a basket of major currencies.
Medium-term outlook
This meeting reaffirms the Federal Reserve's commitment to its dual mandate of maintaining price stability and supporting employment levels, but it also reflects concerns about external shocks to the U.S. economy, with decision-makers prepared to reconsider policy if growth conditions deteriorate or inflation pressures persist at a faster pace than expected.
In conclusion, the June 2025 FOMC meeting embodied a delicate balance between inflationary concerns and potential weak growth, with a clear message that the path of interest rates will remain linked to actual economic data and developments in global markets.