MNI Fed Preview-June 2025: Holding In Anticipation

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• The FOMC will hold rates for a 4th consecutive meeting in June, and continue to convey a patient stance on future rate cut decisions amid elevated policy-related uncertainty.
• The new quarterly projections will still signal the resumption of rate cuts later this year, but likely only one 25bp reduction instead of the two cuts envisaged at the March meeting.
• While risks to both the Fed’s inflation and employment mandates remain elevated, with the new 2025 forecasts looking increasingly reflective of stagflation, the Committee should still signal rate cuts through end-2026 of a similar magnitude to its previous set of projections.
• But in the meantime, the bar to action is very high, with the majority of the FOMC not fully convinced that tariff-related inflation will be transitory, while also not yet seeing a compelling enough deterioration in hard data to warrant easing.
• The first “live” meeting for a cut won’t be until September, and even then it will be very much dependent on inflation remaining relatively tame over the summer and labor market activity continuing to cool. A next cut looks more likely in Q4, by which point there is likely to be much more clarity over the tariff fallout and the broader outlook.
• The Statement and Chair Powell press conference should again reflect the Committee’s “wait and see” approach, with limited changes to May’s language.

Note to readers: MNI’s separate preview of sell-side analyst summaries to follow on Monday Jun 16

MNI Markets Team Expectations For June 2025 Summary Of Economic Projections Medians