The Federal Reserve kept interest rates unchanged in its June 18, 2025 decision. The Fed left the target range at 4.25%–4.50% .
📌 Key Takeaways
1. Steady for a Reason
This is the fourth consecutive meeting the Fed has held rates steady, with no increase or decrease since December .
Policymakers are balancing concerns: tariffs pushing up inflation while also weighing risks of slower economic growth .
2. Outlook Signposts
The updated "dot plot" still shows expectations for two quarter-point cuts later in 2025, though the pace of future cuts (in 2026–27) has been scaled back .
Growth forecasts for 2025 have been revised downward to about 1.4% GDP expansion, with inflation rising to 3% and unemployment inching up to ~4.5% .
3. Market Reaction
Treasury yields dropped and U.S. equities rallied modestly after the announcement .
The messaging strengthens the view that rate cuts may come later this year, but only if inflation cools and economic risks remain manageable.
4. Fed Independence
This decision came in the face of external pressure: no rate cut, despite calls from former President Trump .
Chair Powell emphasized the Fed’s stance of making decisions based on data, not politics .
✅ In Summary
the Fed held rates steady today at 4.25%–4.50%. The central bank is cautiously navigating inflationary pressures from tariffs and slowing growth, signalling possible rate cuts later in 2025, yet maintaining higher rates for now.