#FOMCMeeting
š Key Decisions & Rationale
The Federal Open Market Committee kept its federal funds rate at 4.25%ā4.50%, marking the fourth straight hold this year .
Despite pressure from President Trump, Chair Powell emphasized the Fedās independence and cautious approach amid uncertain inflation dynamics .
The ādot plotā still forecasts two rate cuts in 2025, though later and more slowly than previously expected .
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š Economic Projections Outlook
The updated Summary of Economic Projections reveals:
GDP growth expected to slow to ~1.4% in 2025 (down from ~1.7%).
Unemployment projected around 4.5% in 2025, slightly higher than earlier forecasts.
Inflation (PCE) now seen at 3.0% by year-end, above the Fedās 2% mandate, with only gradual easing into 2027 .
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š§ Market & Policy Implications
Markets initially rallied on hopes of rate cuts, but later pulled back after Powell underscored the cautious data-driven stance .
Economic headwinds include resurgent inflation, trade uncertainty due to tariffs, and geopolitical tensionsāfactors the Fed is closely watching before easing .
Investors now anticipate the first cut around September, aligning with the latest dot-plot outlook .
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š£ Chair Powellās Remarks
Emphasized the need to assess incoming data before cutting ratesāno rush .
Noted that economic uncertainty has eased, notably trade-related, but remains palpable .
Acknowledged strong labor market, with unemployment at ~4.2%, helping cushion any softening .
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š Bottom Line
The Fed is adopting a data-dependent and cautious approachāstalling rate cuts due to sticky inflation and external risks, yet leaving the door open for two modest cuts later in the year. The central bank is navigating a tightrope: supporting growth while avoiding inflation setbacks or policy overshoots.