📢 FED PRESS CONFERENCE INSIGHT – JUNE 2025

Theme: 🧘 “Patience and Forecasting”

The Fed kept rates steady at 4.25%–4.50%, signaling caution despite softening inflation and stable growth. Chair Powell emphasized that policy is “appropriately positioned,” but warned about unseen risks—especially from tariffs.

🔍 Shift in Strategy:

While inflation has eased, the Fed is no longer reacting solely to recent data. Instead, it’s prioritizing forecasts. In December 2024, rates were cut with inflation at 2.5%. Now, despite lower spot inflation, the 2025 forecast is 3.1%—driven by rising trade tensions. Powell stated clearly: policy must move ahead of risk, not behind it.

📊 Diverging Views Within the Fed:

The latest dot plot shows internal division:

– 7 members see no rate cuts in 2025

– 8 project two cuts

The median forecast still implies a 50bps reduction—but consensus is weak.

👷 Labor Market Still Strong (But Fragile):

Unemployment at 4.2% is historically low. Real wages are growing. But Powell noted a fragile balance: layoffs remain low, yet job creation is slowing. If this shifts, unemployment could rise sharply.

⚠️ Key Risks Ahead:

– Tariff effects haven’t fully hit data yet

– AI’s labor impact remains unclear

– Budget cuts may reduce data quality

– Middle East tensions are being monitored, though energy risks are “contained”

🚫 No Political Commentary:

Powell avoided questions about Trump’s criticism or replacement rumors. His stance: the Fed will stay focused on price stability and employment.

📘 What’s Next?

Policy framework reviews and SEP updates are expected by late summer. Powell hinted at potential refinements but warned against unnecessary changes.

✅ Bottom Line:

The Fed isn’t rushing. It’s positioning for long-term credibility, not short-term applause. Don’t expect aggressive rate cuts unless risks materialize more clearly.

#FedOutlook #MacroStrategy #MonetaryPolicy