Washington – The Federal Reserve on Wednesday stabilized interest rates amid high inflation and low economic growth expectations, and the end of this year has been suggested for two more cuts.
Markets, which are not allowed to move this week, have been targeted by the Federal Open Market Committee, which is targeted at a range of 4.25%-4.5%, where it has been in December.
In addition to the rate decision, the committee suggested that two cuts were still on the table by the end of 2025, through its closely viewed “dot plot”. However, it lost a reduction for both 2026 and 2027, putting the expected future rate cut to four or full percentage points.
The plot indicates constant uncertainty about the future of rates from Fed Officers. Represents an officer’s expectations for each dot rates. There was a widespread transmission in the matrix, with a LO TLOOK rate of 3.4% of the Fed Funds in 2027.
Seven of the 19 people who participated have suggested that this year do not want any cuts, from four in March. However, the committee unanimously approved the policy statement.
The economic projections of the meeting suggested further stagnation pressures, with the participant’s total domestic project continued at only 1.4% in 2024 and the inflation was 3%.
Revised forecasts from the last update in March represents a 0.3 per cent point for GDP and an increase of the same amount to the price index of personal use costs. Core PCE is planned to be 3.1%, which has increased by 0.3 per cent. The unemployment outlook saw a small revision, up to 4.5%or 0.1 per cent above March and 0.3 per cent above the current level.
The FOMC statement has changed slightly from the May meeting. The committee said that the economy grew at “solid speed” with “low” unemployment and “slightly elevated” inflation.
Furthermore, the committee suggests less concerns about the gyrades and clouds of the economy on the White House Trade Policy.
“The uncertainty about the economic perspective has been reduced but increased. The committee has focused on the risks to both sides of its dual order,” the committee said.
Despite the statement of why uncertainty has emerged, President Donald Trump has eased some of his fiery business rhetoric and the White House is in the middle of the 90 -day conversation.
However, Trump’s rhetoric toward the Fed is not soft.
Earlier, the president did not ease Fed Chair Jerome Powell and his colleagues again. Trump said that the rate of Fed Funds should be at least two per cent points and that Powell should be “stupid” as the committee did not cut.
Fed officials are hesitant to relocate, fearing that the tariffs passed by Trump this year could lead to inflation in the coming months. The price scales have not yet been suggested that the duties are greater. In addition to softening consumer demand, tariff feed-thru delays and construction of inventory before the announcement of the “Liberation Day” of April 2 have helped them turn their impact.
The conflict between Israel and Iran adds another wild card to the policy mix, the expectation of high fuel prices is an additional factor in preventing the fed from cutting off. This statement does not mention the impact of the Middle East fight.
Gradually the softening economy provides incentives to cut off at the end of this year.
Recent labor market data has increased, long -term unemployment is also increasing and consumers are spending less. Retail sales have fallen by about 1% in May and the latest data has reflected the cooling housing market, reaching their lowest in five years.
For Trump, the importance of lower rates is caused by the high cost of paying for the government to finance its TR 36 trillion loan.
The interest on the loan has reached the total TR 1.2 trillion this year and has exceeded all other budgets except social security and medical. Fed Lost Cut in December, and the treasury yield has increased throughout the year, with additional pressure on the budget deficiency increases by TR 2 trillion or 6% of the total domestic product.
