Federal Reserve (Fed) Chairman Jerome Powell stated this morning (6/19) that the benchmark interest rate remains unchanged in the range of 4.25% – 4.5%, facing the new wave of tariffs from Trump that is about to take effect, but we must "wait and see." Although most Fed officials still predict that there will be two rate cuts within this year, there are significant differences in internal opinions regarding inflation, economic trends, and the timing of policy decisions.

The interest rate remains unchanged at 4.25% – 4.5%, unanimously approved by the FOMC

According to reports, the Federal Open Market Committee (FOMC) voted unanimously this morning (6/19) to maintain the benchmark interest rate in the range of 4.25% – 4.5%, continuing the rate policy established since the beginning of the year.

After this meeting, the Fed also released its latest economic forecasts, which take into account the impact of President Trump's large-scale tariff policy implemented in April.

GDP growth has been revised down, inflation and unemployment rates are rising

According to the latest forecast released by Fed Chairman Powell:

  • The inflation forecast for the end of 2025 has been revised up from 2.7% to 3%

  • The GDP growth rate forecast for 2025 has been revised down from 1.7% to 1.4%

  • The unemployment rate forecast has been adjusted upward to 4.5%, slightly higher than previous predictions

This also reflects internal contradictions within the Fed, as rising inflation typically necessitates maintaining high interest rates, but slowing growth and rising unemployment may require rate cuts to stimulate the economy.

There are differing opinions within the Fed regarding rate cuts

The rate forecast chart released during this meeting shows that Fed officials have differing predictions about rate cuts this year:

  • In March, there were 4 officials predicting no rate cuts this year; now there are 7 officials

  • 2 officials predict a single rate cut

  • 10 officials predict more than two rate cuts before the end of 2025

Powell stated that such differences reflect each official's varying views on economic outlook and risks, and emphasized:

"Currently, economic uncertainty is very high, and no one has confidence in their interest rate predictions."

The Fed maintains a wait-and-see attitude, not in a hurry to adjust policy

At the post-meeting press conference, Powell reiterated that there is no urgency to adjust policy at this stage:

"We believe that the current policy stance gives us flexibility; we still need to observe the economic trends before making decisions."

He pointed out that although Trump's tariffs have been implemented, there has not yet been a significant impact on employment and inflation data, for example, the core inflation increase in May was lower than expected. He added:

"These tariff costs ultimately have to be borne by someone, and we know that part will be passed on to consumers."

Employment remains stable, wage growth is healthy, but economic uncertainty persists

When asked whether he is concerned about an economic downturn, Powell responded that the unemployment rate remains stable at 4.2%, job openings and labor force participation rates are still performing well. The real estate market is affected by insufficient supply and high interest rates, leading to decreased demand and investment in construction projects, but the overall market remains resilient. He emphasized:

"Currently, there are no signals in the labor market indicating a need for rate cuts, but while the uncertainty in the economic outlook has decreased, it remains relatively high."

Powell responds to layoffs, not worried about Trump's pressure

The Fed recently announced a reduction of personnel, expecting to cut 10% of its workforce. In response, Powell stated that this is to demonstrate that "the Fed is an agency that makes good use of public resources."

Regarding Trump's recent calls for the Fed to cut rates, he merely stated:

"We are just focused on doing our job, stabilizing prices and the labor market."

This article states that the Fed predicts two rate cuts this year, with interest rates remaining unchanged, Powell: we still need to observe the impact of Trump's tariffs. It first appeared in Chain News ABMedia.