US Fed FOMC Meeting: Check date, time and rate cut expectations from the Federal Reserve
All eyes will be on the US Federal Reserve’s monetary policy decision today, but Powell’s news conference wearing a purple tie will be the most noteworthy event.
The two-day US Fed’s FOMC meeting is taking place on June 17-18. On June 17 at 2 p.m. ET, Fed chief Powell will announce the decision to either cut the rate or keep it unchanged.
The market expects Powell to keep rates unchanged at 4.25%- 4.5% in the June 2025 FOMC meeting. As of Tuesday afternoon, CME Group’s FedWatch is pricing a 99.9% probability the Federal Reserve holds the target range for the federal funds rate at 4.25% to 4.50%.
On Wednesday, the US Fed is most likely going to stay on hold and stick to its data-driven approach. Despite robust employment growth, recent labor market data revealed a declining participation rate.
Although core inflation remained at 2.8% and tariff-related inflationary threats were not eliminated, inflationary pressures have not decreased enough to initiate a second round of policy easing.
Julius Baer, in a report, says, “We expect the hold to continue until data shows a negative impact from erratic policymaking, enabling a quick removal of the restrictive stance with two rate cuts of 50bps each in September and October. Should data surprise to the upside, delays or a more gradual policy easing are possible.”
In the June FOMC meeting, all eyes will be on two things – Powell’s press conference and the ‘dot plot’. The central bank will release its Summary of Economic Projections along with the ‘dot plot,’ which will show where it expects the federal funds rate to be at the end of this year.
Inflation has been trending lower despite tariffs in place. Powell’s take on the impact of tariffs will be closely watched. The reciprocal tariffs were paused on April 9 for 90 days, but the 10% tariffs were implemented across the board.
The last US CPI data for May did not show any tariff-induced inflation in the economy.
What could spoil the party for the markets is the oil price. Any escalation in the Israel-Iran war could see oil prices surge much higher, leading to global inflation. The Fed’s decision to lower rates going forward will be influenced by the geopolitical climate and oil prices.
US Fed’s FOMC may decide to hold on to rates and not cut till upside risks to inflation remain.
And maybe not what Trump wants. President Trump’s dissatisfaction with Fed Chair Jerome Powell suggests that it may end sooner than planned, with Powell’s tenure slated to expire in May next year.
In April, Trump stated that the conclusion of Powell’s term “cannot come fast enough.” Since then, including last week, Trump has stated that he will not fire Powell. However, he has continued to put pressure on the central bank to lower interest rates and has stated that he expects to select a successor shortly.
Recently, incumbent Treasury Secretary Scott Bessent’s name has been floated, partly because of his earlier remarks on a “shadow Fed chair.” Former Fed Governor Kevin Warsh and Fed Governor Christopher Waller are also in the running.
On Wednesday, June 18, at 2:00 PM Eastern Standard Time, the Federal Open Market Committee will make its revised policy statement public. Markets will have time to react as there is no trading on June 19. The US stock and bond markets will be closed this Thursday, June 19, in observance of the Juneteenth holiday. Juneteenth, which honors the abolition of slavery, was established in 2021 as the eleventh federal holiday and the first new one since the enactment of Martin Luther King, Jr. Day in 1983.
The market predicts quarter-point rate cuts in September and December this year. Only time will tell if they will happen.