June FOMC meeting preview: The Federal Reserve is expected to hold interest rates steady at this month’s meeting, maintaining the target range of 4.25% – 4.50%. Policymakers continue to take a cautious approach, balancing persistent inflation pressures with a cooling economic backdrop. This meeting won’t likely change policy, but it may shift future expectations through updated projections.
June FOMC Meeting Preview: Rate Hold Expected
There is no market pricing for a rate change at this meeting, and Fed officials have signaled no urgency to act. While headline inflation has slowed, core price pressures remain stubbornly high. Recent tariffs are now feeding into consumer prices, suggesting more persistent inflation in the near term. With this backdrop, the Federal Reserve is likely to maintain its current stance.
Fed Outlook: Revised Projections in Focus
The updated Summary of Economic Projections (SEP) may reflect rising inflation expectations for 2025 and beyond. Core PCE inflation could remain above 3% in 2025. Tariffs and other cost pressures are likely to push forecasts higher in the short term. On growth, the Fed may slightly lower its 2025 GDP forecast, while keeping long-run expectations unchanged at 1.8%.
June FOMC Preview: Labour Market Stability
Hiring remains sluggish, but layoffs are limited. Many employers are holding onto staff to avoid rehiring difficulties later. This labour market resilience means the Fed sees no need for stimulus. Unemployment projections are unlikely to change meaningfully, reinforcing the case for staying on hold.
Dot Plot Adjustment and Powell’s Messaging
A slight upward revision to the 2025 median dot is expected, suggesting just one 25bp rate cut this year. Chair Powell will likely emphasize patience, reiterating that policy is well-positioned for current conditions. He will also likely sidestep political questions around President Trump or speculation about Powell’s reappointment.
Final Thoughts: June FOMC Meeting Preview Summary
This June FOMC meeting preview points to a Fed that is firmly in wait-and-see mode. Policymakers are navigating competing risks: inflation that’s proving sticky and a slowdown that hasn’t fully materialized. With data driving decisions, rate cuts before Q4 remain unlikely. For now, markets should expect steady rates and steady messaging.