Investors accepted another predictable Fed meeting. Interest rates remain the same, which is almost certain in Wednesday’s decision. The Fed maintains its position that the economy is stable, even with participants’ uncertainty increasing.
Investors and business leaders may feel the economy shaking in the edge of the knife, but the data, Feeding Chairman Jerome Powell assured them that they showed a solid situation — albeit cloudier than before. Whether they are storm clouds is a key question at hand.
“Uncertainty about the economic outlook has declined, but is still increasing,” a Fed statement issued after the meeting said.
Since the interest rate issue is largely a foregone conclusion, investors turn their attention to the Fed’s summary of economic forecasts, which is often called the “DOT chart.” Hopefully, the quarterly forecasts of Fed officials for the U.S. economy, including expectations for interest rates, inflation and growth, will provide some hints about their view of the economy. Because the Fed is usually concerned about its prospects, investors often want to know more about the fate of the U.S. economy.
In 2025, the median projection rate of the median is two-two.
Previous DOT plots released in March have the same median projection. One of the main updates to this release is the expectation of lower GDP growth and lower inflation over the 2025 period. At the time, it was a significant development because it meant that federal officials not only considered the possibility of these two unwelcome changes, but also began to see them as possible outcomes of the current path of the economy.
That is, it is worth remembering that the DOT chart is not a commitment to a certain amount of tax reduction. Instead, this is a collection of predictions proposed by Fed officials over a given period of time. Importantly, it also fails to convey the certainty of each official in the prediction.
Nevertheless, this is an important measure of the central bank’s view of monetary policy titles. With only six months left in the year, the time to lower its predicted tax rates (but not guaranteed) will only get tighter. For now, the consensus seems to be to cut a tax rate or two.
For President Donald Trump, no interest cuts can come soon. His criticism of Powell has actually become a habitual part of the FOMC meeting. The president believes that interest rates should fall because inflation has not increased. Despite this fact, the Fed is still reluctant to lower interest rates because it is uncertain whether inflation will soar again due to Trump’s tariffs.
So far, the Trump administration has made some progress on its pledged trade deals – investors believe it will calm the market. The United States said it had signed a preliminary agreement with the United Kingdom and established a framework for the agreement with China after two meetings. While the U.S. may return to a welcome early sign in the global economy, the two deals are far from the dozens promised by the White House. As a result, uncertainty remains.
At the same time, geopolitical conflicts can also damage the market, namely, military operations between Israel and Iran. The expansion of conflict in the Middle East has only exacerbated tensions in areas where the world is already turbulent. Transportation through the Red Sea, oil markets and U.S. military involvement are now open questions. Their potential answers are both diverse and important – for the sake of clarity, unfavorable news.
