Earlier today, Taiwan time, the U.S. Federal Reserve (Fed) officially announced the June interest rate decision, maintaining the federal funds rate in the range of 4.25% to 4.50%, consistent with previous market expectations.
Interest Rates Remain Unchanged, Dot Plot Reveals Rate Cut Rhythm
Notably, the latest dot plot shows that decision-makers anticipate the Fed will cut rates twice this year, each by 25 basis points. In 2026 and 2027, they will each reduce rates by 25 basis points.
Simultaneously, the Fed downwardly revised the 2025 GDP growth median to 1.4%, while raising the core PCE inflation forecast to 3.1% and the overall PCE to 3.0%. The unemployment rate estimate slightly increased to 4.5%, suggesting persistent inflation and potential labor market cooling, which is not good news for rate cut conditions.
Fed's Mouthpiece Discusses Risks with Powell
Nick Timiraos, a Wall Street journalist considered the "Fed's mouthpiece," pointed out that decision-makers chose to wait and see, as both action and inaction carry risks. Chairman Powell also emphasized during the press conference:
"The economy is in a robust state, with inflation levels slightly above the target."
Additionally, Powell specifically mentioned tariff issues, stating they could put pressure on the economy and drive up inflation. Nick Timiraos commented:
Powell summarized why the Fed expects short-term price increases but finds it difficult to predict the exact magnitude:
Someone must bear the tariff, but it's hard to determine who.
"Producers, exporters, importers, retailers, and consumers - each will try to avoid being the one to pay. Ultimately, they might share the burden together or one party might bear it entirely."
Market's Initial Response Mild
After the announcement, the four major U.S. stock indices showed minimal volatility, closing mixed:
- Dow Jones Industrial Average fell 0.1% (44.14 points), closing at 42,171.66
- Nasdaq Index rose 0.13% (25.18 points), closing at 19,546.27
- S&P 500 Index fell 0.03% (1.85 points), closing at 5,980.87
- Philadelphia Semiconductor Index rose 0.52% (27.38 points), closing at 5,251.02
In the crypto market, Bitcoin's price briefly dropped below $104,000 early morning but rebounded, currently trading at $104,959, up slightly by 0.5% in the past 24 hours.
