June 20, 2025—In the press conference following this week’s Federal Open Market Committee (FOMC) meeting, Chair Jerome Powell declared, “Despite elevated uncertainty, the economy is in a solid position,” and emphasized the need and their intent to monitor incoming data, particularly regarding inflation.
The Committee decided to leave the federal funds rate between 4.25% to 4.50%, as was widely expected. Powell noted that the unemployment rate remains low and the labor market is at or near maximum employment.
As for inflation, Powell added that it “has come down a great deal but has been running somewhat above our 2% longer-run objective.” Fed officials have revised their Core PCE prices inflation forecast to 3%, up from 2.7% in March and 2.5% last December. This increase is attributable to proposed tariffs imposed by President Trump.
Both tariff uncertainty and weakening economic indicators like retail sales and housing starts have contributed to the Fed lowering its GDP growth forecast for this year to 1.4% (from 1.7% in March) and raising its unemployment forecast to 4.5% (from 4.4% in March).
Fed’s policymakers are still expected to cut rates twice this year, even as they also project that proposed tariffs will eventually push inflation higher.
President Trump has routinely criticized Powell for not cutting rates sooner, while the Fed prefers to wait for more evidence on tariffs and inflation. As shown in the “dot-plot” chart released with the statement, seven FOMC voting officials don’t think the Fed will be able to cut rates at all this year, up from four in March.
Powell has repeatedly stated the need to the Fed to hold options open, stating that its projections are based on many variables, and “with uncertainty as elevated as it is, no one holds these paths with a lot of conviction.”