What did the Federal Reserve say in this meeting? Powell withstands pressure and does not cut interest rates, but there may be action in September!
First, the key point: interest rates remain frozen at 4.25%-4.5%, unchanged from market expectations. The dot plot indicates two rate cuts of 25 basis points next year, but there is increasing internal disagreement - more people support not cutting rates, indicating that hawkish voices within the Federal Reserve are rising.
There is a new signal this time: the Federal Reserve explicitly mentions in official documents that tariffs may push up inflation! Because importers are currently stockpiling wildly, coupled with trade fluctuations that may drag down first-quarter GDP, prices are likely to rise in the future.
In terms of economic data, the Federal Reserve has cut its GDP forecast for next year to 1.4%, expects unemployment at 4.5%, and inflation at 3%. Simply put, economic growth is slowing down, prices are starting to rise, and the job market is not as tight as before.
The balance sheet reduction plan remains unchanged, with the monthly cap staying the same, and there are currently no plans to slow down.
Key conclusion:
The probability of a rate cut in September is highest, but it depends on whether tariffs will cause inflation to stick. If tariffs don't create any problems, there is a high probability of two 25 basis point cuts. There is no need to panic about economic recession now; although the growth rate is slow, it is still positive. The main reason for not cutting rates now is the fear of inflation rebounding and employment suddenly changing. Next, keep a close eye on the data from July to August: core PCE, service price index, and employment cost index. These three indicators will directly determine whether we can cut rates this year.
In summary: Powell's attitude this time is very firm; he says he doesn't pay attention to political pressures, but the market reaction is flat. After all, everything that needed to be said has been said - rate cuts can wait, but inflation must be defended!
If you are unsure and always chasing highs and cutting lows, feel free to chat. Like + comment, and Tiger Brother will take you on board.
