#FedMeeting #FOMC_Meeting_Results

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The most recent Federal Open Market Committee (FOMC) meeting concluded on June 18, 2025. The FOMC decided to keep the federal funds rate unchanged at 4.25% to 4.50%, marking the fourth consecutive meeting with no rate adjustment. This decision aligns with market expectations, as the CME FedWatch Tool indicated a 99.9% probability of rates remaining steady. The FOMC cited ongoing economic uncertainty, particularly due to potential inflationary pressures from tariffs and a solid but softening labor market, as reasons for maintaining the current rate.

Key points from the meeting:

• Economic Outlook: The FOMC noted that uncertainty about the economic outlook has diminished but remains elevated. Inflation is still “somewhat elevated” but cooling, with the core Personal Consumption Expenditures (PCE) inflation rate at 2.5%, above the Fed’s 2% target. The unemployment rate is at 4.2%, up from 3.4% in 2023, with labor market conditions described as “solid.”

• Summary of Economic Projections (SEP): The updated “dot plot” suggests two quarter-point rate cuts by the end of 2025, potentially lowering the federal funds rate to around 3.75%–4.00%. Median GDP growth expectations were revised down to 1.2% for Q4 2025 (from 1.7% in March), and inflation projections were raised to 3.0% for Q4 2025.

• Tariff Concerns: The Fed is cautious about the impact of President Trump’s trade tariffs, which could increase inflation and unemployment. Fed Chair Jerome Powell emphasized a data-dependent approach, awaiting clearer economic data before further rate adjustments.

• Market Expectations: Futures markets indicate a 65%–80% chance of a rate cut by September 2025, with another possible cut in December. However, some analysts, like those at Bank of America, predict no cuts until 2026 due to persistent inflation risks.

• Press Conference: Powell’s press conference, held at 2:30 p.m. ET (12:00 a.m. IST) on June 18, highlighted the Fed’s focus on balancing its dual mandate of price stability and maximum employment. He reiterated the 2% inflation target and suggested a potential shift toward flexible inflation targeting for greater policy agility.

The next FOMC meetings are scheduled for July 29–30, September 16–17, October 28–29, and December 9–10, 2025. The September and December meetings will include updated SEPs, making them critical for further insight into rate expectations.