On June 18, 2025, the Federal Reserve kept interest rates unchanged as expected, with the key interest rate remaining in the corridor between 4.25 and 4.5 percent. This decision is of significant importance for investors, as it fundamentally influences monetary policy and investment behavior.
Background and Expectations
- Interest Rate Decision: The Fed has paused interest rates for the fourth consecutive time, which was anticipated by the markets. The economy continues to show solid growth, and the unemployment rate remains low.
- Economic Situation: The Fed has reaffirmed its forecast, stating that economic activity is stable, the labor market is strong, and inflation is slightly elevated.
- Inflation and Economic Growth: Higher inflation and lower GDP growth are expected for 2025. The Fed’s Dot Plot indicates potential interest rate cuts throughout the year, which could lower the key interest rate to 3.75 to 4 percent.
Powell’s Statements and Influence on the Markets
- Powell’s Tone: The statements of Fed Chair Jerome Powell directly influence market conditions. He is expected to provide hints about possible interest rate cuts in September.
- Market Reactions: Markets react sensitively to Powell’s statements, as they offer insights into future monetary policy. Optimism could generate positive responses, while uncertainties or pessimism may cause volatility.
Political Pressure
- Trump’s Criticism: U.S. President Donald Trump has once again pressed the Fed to lower the key interest rate by 2 percentage points. The Fed remains independent and does not consider such demands.
- Future Developments: Political tension between the Fed and the government may persist, especially if Trump plans to appoint Powell’s successor.
Ultimately, the Fed is sticking to its strategy of supporting the economy regardless of interest rate cuts, signaling a solid economic environment. Future statements from Powell and interest rate decisions will be closely monitored by investors worldwide.