The Fed predicts two rate cuts this year, with the Interest Rate remaining unchanged. Powell: Still needs to observe the impact of Trump's tariffs.

U.S. Federal Reserve (Fed) Chairman Jerome Powell (Jerome Powell) said at (6/19) this morning that the benchmark rate remains at the standstill 4.25% – 4.5%, the range remains unchanged, in the face of Trump's new wave of tariffs is about to ferment, but we must "wait and see". Although most Fed officials still expect to cut interest rates twice this year, there are clear differences of opinion on inflation, economic direction and policy timing.

Interest Rate remains unchanged at 4.25% – 4.5%, FOMC unanimously voted to pass.

According to reports, the Federal Open Market Committee (FOMC) unanimously decided this morning (6/19) to maintain the benchmark interest rate in the range of 4.25% – 4.5%, continuing the interest rate policy since the beginning of the year.

After this meeting, the Fed also released its latest economic forecasts, incorporating the impact of President Donald Trump's large-scale tariff policy implemented in April.

GDP growth revision, inflation and unemployment rate rise

According to the latest forecast released by Fed Chairman Powell:

The inflation forecast for the end of 2025 has been revised up from 2.7% to 3%.

The GDP growth rate for 2025 is revised down from 1.7% to 1.4%.

The unemployment rate forecast has been raised to 4.5%, slightly higher than the previous prediction.

This also reflects the internal contradictions within the Fed, as rising inflation typically necessitates maintaining high Interest Rates, while slowing growth and rising unemployment may require rate cuts to stimulate the economy.

Views within the Federal Reserve on interest rate cuts are mixed.

The interest rate forecast chart released concurrently at this meeting shows that there are differences among Fed officials regarding the prediction of interest rate cuts this year:

In March, there were 4 officials predicting that there would be no interest rate cuts this year, and now there are 7 officials.

2 officials predict that there will be a rate cut once.

10 officials predict that there will be more than two rate cuts before the end of 2025.

Powell stated that such differences reflect each official's varying views on economic outlook and risks, and emphasized:

"Currently, there is a high level of economic uncertainty, and no one is confident in their interest rate predictions."

The Fed maintains a wait-and-see attitude and is not in a hurry to adjust policies.

At the post-meeting press conference, Powell reiterated that there is no rush to adjust policies at this stage:

We believe that the current policy stance gives us some leeway, and we still need to observe the economic direction before making decisions.

He pointed out that although Trump's tariffs have been implemented, there has not yet been a significant impact on employment and inflation data; for example, the core inflation increase in May was lower than expected. He added:

"These tariff costs ultimately have to be borne by someone, and we know that part of it will be passed on to consumers."

Employment remains stable, wage growth is healthy, but economic uncertainty persists.

Regarding concerns about an economic slowdown, Powell responded that the unemployment rate remains stable at 4.2%, and the job vacancy situation along with the labor participation rate are still good. The real estate market has seen reduced demand and investment in construction due to insufficient supply and high Intrerest Rate, but the overall market remains resilient. He emphasized:

"Currently, there are no signals from the labor market indicating the need to cut interest rates, although the uncertainty surrounding the economic outlook has decreased, it remains relatively high."

Powell responds to layoffs, not worried about Trump pressuring.

The Fed recently announced a reduction in its workforce, expecting to cut 10% of its personnel. In response, Powell stated that this is to demonstrate that "the Fed is an institution that makes good use of public resources."

As for Trump's recent calls to pressure the Fed to cut interest rates, he only stated:

"We focus only on doing our duty, stabilizing prices and the labor market."

This article predicts that the Fed will cut interest rates 2 times this year, with the interest rate remaining unchanged. Powell: Still need to observe the impact of Trump's tariffs. First appeared in Chain News ABMedia.