The Federal Reserve (FED) remains on hold, but the market actually "wants to cut rates".
On June 18, 2025, the Federal Reserve (FED) chose to keep interest rates unchanged at the target range of 4.25% to 4.5% during its monetary policy meeting. Everything seems calm and in line with market expectations, but don't be fooled by appearances — after this meeting, market expectations for a rate cut in September soared to 71%!
What does it mean? The Federal Reserve (FED) does not say, but the market has already "imagined" a future easing script. Against this backdrop, the Federal Reserve (FED) itself has raised its inflation forecast (to 3%) while lowering its economic growth forecast (to 1.4%), on one hand claiming there is no rush to cut interest rates, while on the other hand presenting a stance that "the economy might not be able to withstand."
Powell continued to use "fuzzy language" at the press conference: inflation is still relatively high, the economy is still uncertain, "we will closely monitor the data"—translation: they haven't figured it out either, and the market sentiment has taken the lead.