Fed holds key rate steady, still sees two more cuts this year
UNITED STATES, JUN 19 – Federal Reserve projects two interest rate cuts in 2025 despite inflation risks from tariffs and slower growth, with GDP expected to rise just 1.4%, Fed officials said.
- On June 18, 2025, the Federal Reserve held its benchmark rate at 4.25%-4.50% after its fourth policy meeting, penciling in two quarter-point cuts later this year.
- Amid last year’s three rate cuts, policymakers weighed volatile U.S. trade policy and persistently high inflation alongside slower growth before deciding on rate guidance.
- Projections forecast growth at 1.4%, unemployment at 4.5%, and inflation at 3%, Powell said, while the Fed's outlook remains cautious amid economic uncertainties.
- In response to the decision, markets fell, with futures for the S&P 500 and Dow Jones sliding 0.6%, as President Donald Trump labeled Fed Chair Jerome Powell 'stupid' and urged halving the rate.
- Looking forward, projections show inflation will hold at 2.4% through 2026 before easing to 2.1% in 2027, while investors price around a 70% chance of at least two rate cuts in 2025.
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Despite President Trump's demands, Fed holds the key interest rate stable. Currently, it is between 4.25 and 4.5 percent. A forecast shows lower economic growth and higher inflation.
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