At the FOMC meeting today (June 18, 2025), the Federal Reserve decided to maintain the federal funds rate target range at 4.25%–4.5%, aligning with market expectations. This decision reflects the Fed’s ongoing assessment of a solid economy, slightly elevated inflation (PCE at 2.3%, core PCE at 2.6%), and a stable labor market, while monitoring uncertainties like trade policy impacts.
Here’s a quick summary of Fed Chair Jerome Powell’s FOMC Press Conference on June 18, 2025:
- Rates Unchanged: The Federal Reserve kept the federal funds rate steady at 4.25%–4.5%, as widely expected.
- Economic Outlook: The current inflation rate in the U.S. (2.35%) is running slightly above the Fed’s 2% goal, with total PCE prices estimated at 2.3% and core PCE at 2.6% in May. The economy is solid, with GDP growth (excluding net exports) at a steady pace, though trade policy concerns have soured sentiment.
- Labor Market: Unemployment remains low and stable, with labor conditions consistent with maximum employment and not driving inflation.
- Tariff Uncertainty: Powell highlighted reduced uncertainty in the economic outlook but noted ongoing trade policy concerns, particularly tariffs, which complicate GDP measurements and could impact inflation and employment. The Fed is adapting in real-time to assess tariff effects.
- Policy Stance: The Fed is well-positioned to respond to economic shifts, maintaining flexibility for potential rate cuts in 2025 (median forecast: 50 bps of cuts). No rush to act, but ready if inflation eases or labor market weakens.
- Market Reaction: Stocks held gains, with focus on Powell’s comments calming concerns; markets expect possible rate cuts in September or December. Stocks rose modestly immediately after the announcement—Dow, S&P 500, and Nasdaq each added ~0.3–0.5%—before settling into a narrow range. Energy stocks declined (oil prices fell ~2%), while consumer discretionary and tech (including Tesla +2.28%, Marvell +7.33%) outperformed.
Powell emphasized a data-driven, non-political approach, with the Fed balancing its dual mandate of maximum employment and price stability amid trade policy uncertainties.
Hours before the FOMC meeting, President Donald Trump called Federal Reserve Chair Jerome Powell “a stupid person”, and suggested the Fed “probably won’t cut (interest rates) today”.
He argued that the Fed’s key borrowing rate should be cut by at least 2 percentage points, claiming high rates were costing the U.S. “hundreds of billions” in debt payments. Trump contrasted the Fed’s inaction with the European Central Bank (ECB), which he claimed had cut rates multiple times (10, per Trump, though reports suggest seven or eight cuts since June 2024).
He also suggested personal animosity, stating, “I don’t even think he’s that political. I think he hates me,” and floated the idea of appointing himself to the Fed, though this was rhetorical.
Trump’s statement is part of a pattern of attacks on Powell, dating back to his first term when he appointed Powell in 2017 but later criticized him as a “fool,” “numbskull,” and “major loser” for not cutting rates. In April 2025, Trump even suggested Powell’s “termination cannot come fast enough,” though he later backtracked, claiming no intent to fire him.
Trump’s push for rate cuts is tied to his economic narrative, claiming “virtually no inflation” and that tariffs are boosting U.S. revenue, assertions that conflict with economic data showing inflation above the Fed’s 2% target (2.4% in March, per CPI) and tariffs potentially increasing prices. Powell noted tariffs could cause “at least a temporary rise in inflation,” possibly persistent, which justifies the Fed’s reluctance to cut rates.
Markets remained largely unfazed by Trump’s comments and the Fed’s decision, with the Dow Jones down 0.10% and Nasdaq up 0.13% on June 18.
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