#PowellRemarks 🏦 1. Policy Pause, But Not Permanent

The FOMC held the federal funds rate steady at 4.25%–4.50%—marking the fourth consecutive pause.

The summary of economic projections still suggests two rate cuts by year-end, but internal Fed sentiment has shifted: roughly seven of 19 officials now expect no cuts in 2025 .

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🔥 Tariffs: Core Inflation Risk

Powell emphasized that tariffs will boost inflation over the summer, stating that “someone has to pay for the tariffs” .

The Fed raised its 2025 inflation projections: core PCE now seen around 3%, up from ~2.8% earlier .

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📉 Growth Downgrade & Stagflation Threat

GDP growth outlook trimmed to ~1.4% in 2025, with unemployment projected to rise to 4.5% by year-end .

Analysts warned of potential stagflation risks—a mix of slowing growth and elevated inflation .

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🧭 Data-Dependent, Communication Cautious

Powell stressed that the Fed is ‘data-hungry’ and will proceed cautiously, requiring more clarity before committing to cuts .

He also raised alarms about proposed government cutbacks to key economic data sources, arguing that high-quality data is a **“huge public good”** .

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🌍 External and Geopolitical Uncertainty

Besides tariffs, Powell flagged Middle East tensions (e.g., Israel‑Iran conflict) as an added risk factor for both growth and inflation .

He rebuffed political pressure (e.g., from President Trump urging immediate cuts), reaffirming: the Fed remains independent and will follow the data .

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📊 Market & Investor Takeaways

Signal Implication

Bond yields T‑note yields rose as markets repriced, expecting later and fewer cuts

Equities U.S. equities were mixed; strength early was rattled by hawkish tone, S&P and Dow retracing modest gains

Investor strategy With persistent inflation risk and growth slowing, analysts suggest diversifying and considering floating-rate credit.