## đ Key Takeaways from Powellâs June 18 Press Conference
### 1. Interest Rates: On Hold for Now
* The Fed kept its benchmark rate steady at 4.25â4.50% .
* While the Summary of Economic Projections still anticipates two possible rate cuts in 2025, the tone has shiftedâseven of 19 members now expect no cuts at all .
* Powell emphasized that monetary policy is ânot on a preset courseâ, and each move will be data-driven .
### 2. Inflation: Still a Watchpoint
* Fed forecasts now show core PCE inflation at roughly 3.1% in 2025, up from prior estimates .
* Powell flagged tariff-induced inflation as a key concernâwarning that tariffs are increasing costs and could prompt businesses to pass those on to consumers .
* He cautioned that current inflation metrics remain âtoo highâ, underscoring the need to see clearer, sustained progress before implementing cuts .
### 3. Data & Budget Cuts: A Risk to Watch
* Powell warned that budgetary cuts at agencies like the Bureau of Labor Statistics could undermine the quality of economic data â the lifeblood of Fed policy decisions
* He emphasized that reliable, detailed data is a public good vital to monetary transparency and market trust .
### 4. Economic Outlook: Balanced but Uncertain
* The Fed downgraded its 2025 GDP growth forecast to around 1.4â1.7%, with unemployment expected to rise modestly to 4.4â4.5% .
* Labor markets remain **robust**, with unemployment near 4.2% â though Powell noted potential tradeoffs if inflation and unemployment both rise, a classic stagflation scenario .
### 5. Political Pressures & Independence
* Despite public pressure from former President Trump to cut rates, Powell reaffirmed the Fedâs independence and commitment to its dual mandate .
* Trump labeled the rate policy as âstupid,â but Powell pushed back, highlighting the Fedâs focus on economic fundamentals, not politics .
## đ§ Market and Strategic Implications
* Treasury yields saw higher volatilityâinitial drops post-forecast release were reversed after Powellâs cautious commentary.
* Investor sentiment remains optimistic, but analysts warn of complacency given the risks from tariffs, sticky inflation, and delayed cuts .
* Suggested strategies include diversifying assets globally and exploring floating-rate credit, which could offer better protection in a no-cuts or higher-rate environment .
## đ What Powellâs Remarks Mean in Summary
| Theme l | Implication |
| Inflation | Still too hot; Fed not ready to ease |
| Policy Cuts | Possible later in 2025, but timing unclear |
| Data Dependence | Crucial inputs; budget cuts pose a threat |
| Fed Independence | Reasserted despite political noise |
Powellâs message was firm: no rate cuts until inflation is decisively under control, and each decision will be governed by evolving data, not external pressure. The Fed appears prepared to prioritize inflation targeting over short-term economic support, though they remain vigilant for signs that unemployment could rise.
