Fed Holds Steady While Eyeing Potential Rate Cuts

What’s going on here?

Federal Reserve Chair Jerome Powell announced the Fed will keep interest rates steady, despite calls for cuts amid trade uncertainties and inflation concerns.

What does this mean?

The Federal Reserve has kept its benchmark rate unchanged for the fourth time, signaling a wait-and-see approach. Inflation remains above the 2% target, but low unemployment offers some resilience. The Vice Chair for Supervision has shown openness to future rate cuts if inflation cools, potentially as soon as next month. Meanwhile, President Trump has been vocal, urging the Fed to slash rates by three percentage points. The CME FedWatch tool shows a 19% chance of a cut next month, though most expect rates to remain steady. Uncertainties from trade policies and tariffs, particularly with China, continue to draw attention.

Why should I care?

For markets: Holding course amid stormy seas.

Markets are closely watching the Fed’s decisions due to current economic pressures. The steady rate offers temporary stability, but investors should stay cautious of potential shifts if the Fed acts on controlling inflation. Ongoing US-China trade negotiations add complexity, potentially impacting global market dynamics.

The bigger picture: Navigating trade and policy turbulence.

The US-China trade pact framework indicates progress, yet uncertainties remain. The temporary tariff suspension announced by President Trump might ease some economic strain, but trade disagreements could have lasting effects. With the global economy shifting, the Fed’s next moves will be crucial in setting the path for economic growth and stability.

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Originally Posted June 24, 2025 – Fed Holds Steady While Eyeing Potential Rate Cuts