Link Securities | The Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) kept its benchmark rates unchanged in the 4.25%–4.50% range for the fourth consecutive meeting in June, in line with expectations, as its members adopted a cautious stance to fully assess the impact of President Trump’s policies, particularly those related to trade tariffs, immigration and taxation. FOMC members also noted that uncertainty about the economic outlook has diminished but remains elevated.
Despite this, the Fed continues to project two interest rate cuts this year, although it only anticipates a 25 basis point cut in 2026 and 2027. In its updated forecasts, the Fed lowered its GDP growth forecast for 2025 to 1.4% (versus 1.7% in March) and for 2026 to 1.6% (versus 1.8% in March), while maintaining its growth estimate for 2027 at around 1.8%. The Fed expects the unemployment rate to stand at 4.5% in 2025 and 2026, compared to its previous estimates of 4.4% and 4.3%, respectively. With regard to inflation, the Fed expects the personal consumption expenditure (PCE) index to reach 3.0% in 2025 (versus 2.7% in March), and to decline to 2.4% in 2026 (versus 2.2% in March) and to 2.1% in 2027 (versus 2.0% in March).
