The Fed holds rates steady and keeps rate-cut outlook, but revises growth down.
Fed sticks with rate cut outlook, but lowers growth forecast.
As expected, the Federal Reserve kept its interest rate unchanged at 4.25%-4.50%. While uncertainty has eased somewhat, the Fed emphasized that lingering risks still call for a cautious approach.
The latest dot plot shows that expectations for two rate cuts in 2025 remain. However, seven members of the Committee now anticipate no rate cuts in 2025. The Fed also revised its GDP growth forecast downward to 1.4% (from 1.7% in March) and raised its core inflation projection to 3.1%.
Updated projections point to a softer labor market, with unemployment expected to reach 4.5%. No changes were announced to the Fed’s balance sheet reduction plans.
Market Takeaway:
The statement confirms a cautious stance in response to slower growth, tariff pressures, and lingering inflation risks. While rate cuts are still in the forecast, the Fed acknowledges that balancing growth and inflation will be more challenging.
Fed Indicators Update (June vs. March)
Source: Federal Reserve
