From Yahoo Finance: 2025-06-13 06:04:00

The Federal Reserve is expected to keep interest rates unchanged as investors focus on new central bank projections that consider recent soft data and risks from trade tensions and conflicts in the Middle East. President Trump wants a full percentage point rate cut, despite recent inflation easing and slowing job growth. An Israeli attack on Iran has increased oil prices, potentially impacting inflation. Trade tensions and budget uncertainties also play a role in Fed decisions. Fed officials remain cautious in their decisions due to geopolitical risks and commodity price swings.

Recent Fed commentary suggests a wait-and-see approach, with little urgency to adjust policy amid economic uncertainties. Expectations for two rate cuts in 2025 align with investor predictions, though pricing shifted after lower-than-expected inflation data. Unemployment remains at 4.2%, and inflation has been close to the 2% target. The Fed’s policy rate range was set in December but may change based on current economic conditions.

Goldman Sachs analysts have lowered recession odds to around 30%, expecting less inflation and slightly higher growth this year. However, their Fed rate outlook remains unchanged, anticipating higher inflation numbers to delay rate changes until December. Fed projections may decrease to a single rate cut this year due to outstanding issues and uncertainties. Weak pass-through from tariffs to inflation could lead to weakening demand and prompt faster rate cuts, starting in September. The path to Fed rate cuts is becoming clearer as demand softens and unemployment rises.



Read more at Yahoo Finance: Fed to keep rates steady as tariffs, possible oil shock counter inflation data