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Orgo-Life the new way to the future Advertising by AdpathwayGlobal EconomicsUS FOMC Meet: Unchanged Interest Rate To Moderately Restrictive Policy — Key Highlights
The US Fed has unanimously kept its benchmark unchanged for the fourth consecutive time.
19 Jun 2025, 01:38 AM IST i 19 Jun 2025, 01:38 AM IST 19 Jun 2025, 01:38 AM IST
US Fed Chair Jerome Powell (Image: Federal Reserve/X)
The Federal Open Market Committee has decided to keep its benchmark interest rate unchanged at 4.25–4.5% for a fourth consecutive time. The decision was unanimous. It has raised the inflation projection to 3% in 2025, higher than the 2% target. At the same time, the US GDP growth forecast has been lowered to 1.4%.
Here are the key highlights from Fed Chair Jerome Powell's speech:
Powell noted that policy is "modestly restrictive" as compared to a "clearly restrictive" stance in March. "The economy is now well positioned to respond in a timely way to potential economic developments," stated the Fed Chair.
"It all depends on the size of the tariffs, how long it takes for them to be passed through and on keeping inflation expectations anchored," Powell said. He also said the effects of tariffs will depend, among other things, on their ultimate level. "Increases in tariffs this year are likely to push up prices and weigh on economic activity."
Some of the tariff costs will be borne by US consumers and businesses, Powell says as the Fed sees higher inflation coming. This is in contrast to Trump's repeated assertion that tariffs will hit other countries.
On the June 'dot plot', Powell said focus is on near-term rates instead of longer-term rates. The FOMC Dot Plot still sees two 25-basis-point rate cuts in 2025, but fewer cuts in 2026 and 2027. "No one holds these rate paths with a lot of conviction," Powell said.
Powell notes that the contraction in the first quarter was mostly due to swings in imports, so it makes GDP measurement difficult right now. He said that sentiment surveys show elevated uncertainty about the economic outlook and that it remains to be seen how this impacts spending and investment decisions.
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