The upcoming interest rate decision of the Federal Reserve (Fed) on June 18, 2025, has put investors worldwide on high alert. This caution can be attributed to various factors, including the economic situation in the U.S., political pressure, and global uncertainties.
Economic Situation in the U.S.
Inflation and Labor Market: Core inflation in the U.S. remains above the target of 2 percent, making a rate cut unlikely. The labor market appears robust, which also argues against a rate cut.
Economic Growth: Despite uncertainties such as tariffs and geopolitical tensions, the U.S. economy shows surprising resilience.
Political Pressure and Uncertainties
President Trump’s Demands: U.S. President Donald Trump continues to demand significant rate cuts, leading to political pressure on the Fed. However, these demands contradict the economic data.
Tariffs and Geopolitical Tensions: The tariffs introduced by Trump have created additional uncertainties and could further fuel inflation. Geopolitical tensions, such as the conflict in the Middle East, also affect economic stability.
Expectations for the Interest Rate Decision
Stable Rates Expected: Most analysts expect the Fed to keep the key interest rate unchanged, in the range of 4.25 to 4.5 percent. This would mean that the Fed remains resistant to political pressure from the White House.
Independence of the Fed: The Fed’s decision is seen as a test of its independence. A data-driven decision is crucial to maintain the credibility of the central bank.
Implications for Global Markets
German Investors: The Fed’s interest rate decision impacts global markets, including German investors. A stable interest rate policy could lead to greater market stability.
Global Economy: The Fed’s decision affects not only the U.S. economy but also the global economy, as it influences interest rates and exchange rates worldwide.
Overall, investors remain cautious, as the Fed’s interest rate decision could provide essential clues regarding future interest rate strategies and will have significant implications for global markets.