- The Federal Open Market Committee (FOMC) kept the benchmark federal funds rate unchanged at 4.25%–4.5%, in line with expectations.
- The Fed highlighted rising uncertainty around the economic outlook due to ongoing trade tensions and recent tariff announcements by the Trump administration.
- While the Fed did not commit to future rate cuts, it acknowledged two-sided risks: higher inflation from tariffs and slowing growth, raising the spectre of a stagflationary scenario.
- GDP fell 0.3% in Q1 2025, but the Fed maintains that the economy is expanding at a “solid pace”, supported by steady job growth.
- Inflation is cooling but remains above target: headline inflation at 2.3%, core at 2.6%, though tariffs are expected to create upward price pressure.
- Market pricing suggests no immediate cuts, but expectations for three rate cuts in 2025 remain, with the first possibly coming in July.
Stagflation risks and trade tensions cloud outlook. Here’s how investors can navigate the volatility.
Key Announcements from the FOMC
