Fed Holds Rates Steady in June as Policymakers Signal Patience
The U.S. Federal Reserve wrapped up its June policy meeting with no change to interest rates, leaving the benchmark federal funds rate at 4.25% to 4.50% for the fourth consecutive time.
The decision aligns with widespread expectations from investors and analysts, who anticipated that the central bank would maintain its cautious stance amid lingering uncertainty around inflation and economic growth.
No change to dot-plot as well. Fed officials forecast 2 rate moves by end of the year (Seven members forcecast no cuts – two more than march). Four members forecast only one cut.
Fineqia senior analyst Matteo Greco noted in an email that projections for rate cuts in 2025 have been significantly scaled back — down from 100 basis points earlier in the year to just 50 basis points at present. He attributed this adjustment to stronger-than-expected employment data and inflation that continues to hover above the Fed’s 2% goal. Greco also warned that if instability in the Middle East drags on, the expected cuts could shrink even further, potentially to just 25 basis points.
Waiting for September
The Fed’s June inaction leaves the door open for a possible pivot later this year. Current market pricing shows a strong expectation—around 70%—that the first rate cut could come in September, provided inflation continues its gradual descent and labor market conditions weaken further.
Ahead of the meeting, officials including Minneapolis Fed President Neel Kashkari and Philadelphia Fed President Patrick Harker had urged a wait-and-see approach, citing the uncertain trajectory of both prices and employment. Their comments hinted that the Fed was in no rush to change course and today’s outcome confirmed that message.
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