Fed's Two-Day Monetary Policy Discussion Commenced on Tuesday-All Relevant Information Highlighted
Heads Up: Fed's Interest Rate Decision Returns Today
Here's the lowdown on what to expect from the Federal Reserve's two-day monetary policy meeting wrapping up on June 18, 2025.
The Fed Stays Put: Rates Remain Steady for Now
Fed officials are generally expected to keep the key fed funds rate at its current level of 4.25% to 4.50%. This rate, which impacts loans of all kinds, has been held at a higher-than-usual level to dampen borrowing and spending, and bring inflation down to the Fed's target of 2% annually.
While prices have cooled off in recent months, policymakers remain worried that President Trump's tariffs could stoke inflation as we move through the year.
Trump's Tirade and the Fed's Call
The rate hold decision could draw some criticism from President Donald Trump, who's publicly punched at Fed officials and demanded they slash rates to rev up the economy. The Fed, it's worth mentioning, operates independently and is not subject to Trump's direct control.
With the interest rate decision being mostly a foregone conclusion, the wildcard of the meeting will be the quarterly economic projections, including the infamous "dot plot."
Dot Plot: Two Cuts or Just One?
Fed officials last made their projections in March. At that time, they anticipated a median of 2 rate cuts, taking the range to 3.75% to 4%. The outlook has changed since then, with the pause of Trump's sweeping tariffs against trading partners until July.
Some experts predict the Fed may scale back its projections to just one rate cut in light of the tariffs uncertainty. Others believe the Fed will stick to their anticipated two quarter-point cuts, worrying that the tariffs could slow the economy even more and push up the unemployment rate.
Remember, the dot plot shows how many times each FOMC member expects to reduce rates—it's not a guaranteed action, but a snapshot of where policymakers stand at this moment in time.
Keep an eye on the developments from the Fed's gathering. The press conference with Chair Jerome Powell following the announcement could offer some additional insights. Happy investing!
Source: Our analysis and interpretation of information available from various sources, including Fed projections, economist assessments, and public statements.
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- Despite President Trump's calls for rate cuts, the Federal Reserve may only consider one cut in their quarterly economic projections, given the uncertainty surrounding the impact of tariffs on trading and business.
- The trading of financial tokens, such as ICOs, may be affected by the outcome of the Fed's decision on interest rates and future financial policy, as changes in these factors can impact the broader economy and investment opportunities.
