At the FOMC meeting, the Fed decided to keep rates steady, but scrapped the risks of higher unemployment and inflation in latest statement.
Highlights
The Fed has decided to keep interest rates steady at the benchmark 4.25% to 4.5%.
This is the fourth consecutive time Powell and the FOMC are opting against a rate cut.
Based on assessments, there are projections of two rate cuts this year, totaling 50 basis points.
The Federal Reserve has again decided to keep interest rates unchanged following the June FOMC meeting. This comes in line with expectations that the US Central is unlikely to begin quantitative easing (QE) until the latter part of this year.
Fed Keeps Interest Rates Unchanged Following FOMC Meeting
In a press release, the Fed announced that the committee has decided to maintain the target range for the federal funds rate between 425 and 450 basis points (bps). This marks the fourth consecutive FOMC meeting in which the Central Bank has decided against cutting rates.
The committee stated that uncertainty about the economic outlook has diminished but remains elevated. It also lowered the 2025 GDP estimate to 1.4% and lifted the inflation estimate to 3%. However, it is worth mentioning that in the latest statement, the Fed omitted lines about risks of higher unemployment and inflation, which is a positive for the market.
This Fed rate decision aligns with expectations, as traders had bet that there was little to no chance of an interest rate cut at this June meeting. Now, market participants would have their eyes on Fed Chair Jerome Powell’s speech to have an idea of what the FOMC’s next move could be.
As CoinGape reported, Jerome Powell’s Speech will take place at 2:30 pm ET. The Fed Chair is likely to comment on the rising tensions in the Middle East between Israel and Iran. The hostility between both countries has sent oil prices rising, which could lead to rising inflation.
As such, Powell could allude to this and the Trump tariffs as to why they decided to keep rates steady at the FOMC meeting. The Fed projects that there will be two rate cuts this year, totaling 50 basis points.
Source: Federal Reserve
Specifically, eight Fed officials expect two rate cuts this year, seven project zero rate cuts, two anticipate one cut, and the other two project three rate cuts. There are still four FOMC meetings this year, although traders expect the Central Bank to keep rates unchanged during the July meeting.
