The Federal Reserve System of the United States unanimously voted on Wednesday, June 18, 2025, to maintain the key interest rate at 4.25–4.50%. Despite increasing pressure on the inflation front, the regulator is not changing its trajectory and still has two rate cuts on its radar for this year. At the same time, Fed Chair Jerome Powell made it clear: the numbers are unstable, and there are still many variables on the board — no decisions have been set in stone yet.
During the press conference, Powell did not resort to diplomatic half-measures and pointed out directly: the bill for the tariffs proposed by the Trump administration will ultimately be paid by ordinary Americans. And, judging by the indicators, this inflationary ‘upside’ is already starting to penetrate the real sector — albeit at a slow pace.
“We are already beginning to see the first effects,” Powell noted, emphasizing that tariff pressure is slowly but surely being reflected in prices.
According to him, short-term inflation expectations have risen — and this is evident both in the market and in consumer, business, and professional forecaster surveys. The reason is simple: the same tariffs that are gradually unwinding the price spiral.
Powell also explained the logistics chain of rising prices: goods that are just now reaching store shelves may have been imported before the new tariffs were imposed — and therefore the inflationary effect has not fully manifested yet.
“This takes time. We expect to see more consequences in the coming months,” he noted.
When journalists directly asked whom the financial burden of tariffs would ultimately fall on, Powell did not evade the question:
“Everyone I talk to expects a noticeable inflationary spike in the coming months precisely because of the new tariffs. Because someone in this chain — whether it be the producer, exporter, importer, retailer — ultimately, yes, the end consumer — will have to bear this cost.”
He added:
“No one wants to be the one to take the hit. But in reality, tariffs do not evaporate — their cost will inevitably be distributed throughout the supply chain and reach the price tag that the consumer will see. This is just economic physics.”
As for the Fed's future actions, Powell made it clear: there will be no sharp moves. The regulator will continue to move cautiously:
“We are currently in a position where we can afford to wait and gather more data on the trajectory of the economy before making decisions on adjusting monetary policy.”
He separately commented on the infamous dot plot — the chart of point forecasts from participants #fomc :
“It should not be interpreted as a roadmap or, even more so, as a promise. It is more of a mental exercise — an exercise in conditions of extreme uncertainty.”
Powell emphasized that none of us hold onto these trajectories with particular confidence and that any steps will be strictly supported by economic data — that is, they will depend on incoming macroeconomic signals, not on a predetermined course.
At this stage, 19 members of the FOMC forecast two rate cuts in 2025. However, Powell warned: this does not mean consensus. These are merely assumptions, not approved policy.
Despite all the potential turbulence, Powell expressed confidence in the current state of the economy:
“Over the past three years, the US economy has repeatedly refuted forecasts of a slowdown. This, frankly, is astonishing. Sooner or later, a downturn will certainly happen, but for now we do not see signs of this.”
