Fed Keeps Rates Steady, Still Sees Two Rate Cuts by Year End

2025-06-18 18:01 By Joana Taborda 1 min. read

The Federal Reserve left the federal funds rate unchanged at 4.25%–4.50% for a fourth consecutive meeting in June 2025, in line with expectations, as policymakers take a cautious stance to fully evaluate the economic impact of President Trump’s policies, particularly those related to tariffs, immigration, and taxation.

Officials also noted that uncertainty about the economic outlook has diminished but remains elevated.

Despite this, the Fed continues to project two rate cuts later this year, though it anticipates only one quarter-percentage-point in 2026 and 2027.

In its updated projections, the Fed downgraded its GDP growth forecast for 2025 to 1.4% (vs 1.7% in March) and for 2026 to 1.6% (vs 1.8%), while leaving the 2027 estimate unchanged at 1.8%.

The unemployment rate is now expected at 4.5% in both 2025 and 2026 (vs 4.4% and 4.3%, respectively).

As for inflation, the Fed sees the PCE rate at 3.0% in 2025 (vs 2.7%), easing to 2.4% in 2026 (vs 2.2%), and 2.1% in 2027 (vs 2.0%).



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