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Informist, Thursday, Jun. 19, 2025

 

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--Median of US Fed official view shows 50 bps rate cut by December
--US FOMC: To continue cutting Treasury securities holdings, agency debt
--US FOMC: Will carefully assess future data, evolving view, balance of risks
--US FOMC: Attentive to risks to both sides of dual mandate
--US FOMC: Uncertainty about econ outlook diminished but remains elevated
--US FOMC: Seek to achieve maximum employment, inflation of 2% in longer run 
--US FOMC: Inflation remains somewhat elevated
--US FOMC: Unemployment rate remains low, labor market conditions stay solid
--US FOMC: Recent data shows econ activity continued to expand at solid pace
--US FOMC leaves federal funds rate target range unchanged at 4.25-4.50%
 

 

NEW DELHI – The US Federal Open Market Committee on Wednesday unanimously voted to keep the federal funds target rate range unchanged at 4.25-4.50% for the fourth consecutive meeting. US Fed officials continued to guide for only 50 basis points of rate cuts in 2025.

 

In a change in commentary from last month, the committee noted that uncertainty about the country's economic outlook has diminished but remains elevated. "The Committee is attentive to the risks to both sides of its dual mandate," it said.

 

The FOMC has held rates at the current level in 2025 after cutting the policy rate target range by 100 bps between September and December. Analysts and traders had almost unanimously expected the US FOMC to hold rates on Wednesday. At 0005 IST, the yield on the 10-year US Treasury note was at 4.35%, little changed from 4.34?fore the rate decision.

 

US jobs growth slowed in May amid uncertainty about US President Donald Trump administration's import tariffs and the unemployment rate held steady at 4.2% for the third consecutive month. The FOMC said that unemployment rate remains low and labour market conditions remain solid but inflation remains somewhat elevated. "The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run," it said.

 

In the Summary of Economic Projections released along with the rate decision, seven of the 19 Fed officials guided for interest rates to be steady by the end of the year, against four in March. The median view was retained at the Fed funds rate declining to 3.75-4.00% by December end, with eight officials of the same view, down from nine in March. Two members assessed that only a single 25-bps rate cut would be required by the end of the year.

 

In April, the core PCE price index, which excludes the more volatile categories of food and energy, rose 2.5% on year against a 2.7% increase in March. The Fed's preferred inflation gauge is seen at 3.1% in Oct-Dec, 30 bps higher than prior projections, and to remain above 2% even by the end of 2027.

 

Meanwhile, the median GDP growth was revised sharply downwards to 1.4% annual growth on year in Oct-Dec, from 1.7% previously. The estimate for 2026 was also revised slightly downward to 1.6%. "Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace," the statement said.

 

In the labour market, the unemployment rate median projection has been revised 10 bps higher to 4.5% by December, and is seen settling at 4.5% at the end 2026 and at 4.4% at the end of 2027. The panel will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals, it said. Further, the committee said it will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Pratiksha

Edited by Ashish Shirke

 

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