🏦 Key Points from Powell
1. Rates: Held steady at 4.25–4.50 %
• Powell emphasized the Fed’s “wait‑and‑see” strategy, wanting clarity on the economic effects of tariffs, international tensions, and slower growth before making any changes .
2. Inflation remains a concern
• Core PCE inflation is slightly above the 2% target (2.6% for core, 2.3% headline as of May); tariffs are expected to push prices higher—but whether this will be transient or longer-lasting is unclear .
3. Economic outlook clouded by uncertainty
• Growth projections for 2025–27 were revised down by ~1.25 percentage points; inflation projections were bumped up by about one point .
• Powell described paths in the Fed’s “dot plot” as the “least unlikely” given high uncertainty—highlighting low confidence in precise forecasts .
4. No immediate rate cut expected
• Rather than pre‑emptively cutting, the Fed opted to maintain a “modestly restrictive” stance. Markets had anticipated cuts sooner, but Powell stressed that the timing remains indeterminate and may slip to September .
5. Fed independence under pressure
• Despite President Trump’s calls for rate reductions, Powell reaffirmed the Fed’s autonomy, citing long-term inflation expectations and institutional credibility as key motivators .
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🎯 What This Means
• Monetary policy: Firm stance for now—data dependent, not politician dependent.
• Inflation focus: Concern over tariffs’ impact raises the risk of higher prices.
• Investor strategy: Expect potential rate cuts starting in September, but likely only one or two this year—and those depend on economic developments.