18.06.2025 21:03
The Federal Reserve maintained its key interest rates for the fourth consecutive meeting on Wednesday, a decision that defied some market expectations. This marks a continuation of its current monetary policy stance.
Despite holding rates steady, the Federal Open Market Committee (FOMC) reiterated its forecast of two interest rate cuts later in the year, a projection consistent with its March assessment. However, Chair Jerome Powell tempered this prediction, emphasizing the inherent uncertainty in these forecasts during a post-meeting press conference. He cautioned against overinterpreting the "dot plot," the graphical summary of individual FOMC members' rate expectations, highlighting the difficulty in accurately predicting future economic conditions.
The FOMC's updated economic projections reveal a slight upward revision to its inflation forecast. The central bank now anticipates the personal consumption expenditures (PCE) price index, its favored inflation measure, to reach 3%, a notable increase from the 2.7% projection made in March. Conversely, the committee slightly lowered its GDP growth forecast to 1.4% from the previous 1.7%, while anticipating unemployment to reach 4.5% by year's end, a marginal increase from the 4.4% projection in March.
While reaffirming the expectation of two rate cuts, Powell remained deliberately vague about the precise timing of these adjustments. He acknowledged the considerable difficulty in predicting when these cuts will occur, prioritizing a data-driven approach to monetary policy adjustments. The Fed's current stance, Powell asserted, is deemed appropriate given the current economic landscape, characterized by solid economic growth, a robust labor market, and gradually declining inflation.
Asked about his future plans beyond his current term as Fed Chair, which concludes in May 2026, Powell deflected the question, stating his current focus remains entirely on his immediate responsibilities. This response follows earlier criticism from President Donald Trump, who expressed his displeasure with the Fed's decision to refrain from rate cuts, contrasting the US approach with that of Europe, which had implemented numerous rate reductions. Trump's comments further underscored the ongoing tension between the executive branch and the central bank concerning monetary policy.
