..markets were not expecting a Fed rate cut and the Fed held steady, reinforcing market expectations for two rate cuts for the remainder of the year, but grew more hawkish beyond that with smaller rate cuts into 2026, however with little conviction on rate trajectory.
..Fed sees lower growth and higher inflation ahead.
FED LOWERS 2025 GDP ESTIMATE TO 1.4%, LIFTS INFLATION TO 3% https://x.com/DeItaone/status/1935397334369603767
Fed's forecast is stagflationary: growth revised lower in 2025 (1.4% from 1.7%) and 2026 (1.6% from 1.8%) unemployment revised higher in 2025 (4.5% from 4.4%), 2026 and 2027 core PCE revised higher in 2025 (3.1% from 2.8%) and 2026 and 2027
2026 rate raised to 3.6% from 3.4% https://x.com/zerohedge/status/1935400672696091083
..Dow could push for a 300pts gain early on before sentiment quashed by Fed, ending lower by -44pts, S&P500 just a tad lower by -0.03% to 5,980 after rising to 6,018 intraday, Nasdaq was however +0.13%
..Gold did not like the tighter monetary policy and succumbed -$19 or -0.57% to $3,369 as DXY gained to 98.89
..Silver momentum took a short term knock, edged lower by -1.05% to $36.74; gold and silver stocks sold down, GDX -0.94% GDXJ -1.28%, SIL -1.04%, SILJ -1.72%
...with Trump's approval and the Ayatollah not blinking, almost assured now that US will join the war.
BREAKING: Trump has approved attack plans for Iran, but he is holding off on giving the final order to see if Iran will abandon its nuclear program, per WSJ
https://x.com/unusual_whales/status/1935445847719952580
...but this market does not know what to do, neither wanting to fear enough and remaining complacent nor wanting to be bullish enough to push forward. Fed cuts outlook for US economy but holds rates Amara Omeokwe
Updated Jun 19, 2025 – 7.19am,first published at 4.32am
New York | The Federal Reserve cut its outlook for the US economy on Wednesday (Thursday AEST), with policymakers split on whether they would be able to reduce interest rates this year as Donald Trump’s tariffs bring risks of higher inflation.
The Federal Open Market Committee voted unanimously to hold the benchmark federal funds rate in a range of 4.25 per cent-4.5 per cent, despite the US president again calling for Fed chairman Jerome Powell to slash borrowing costs.
Officials also downgraded their estimates for economic growth this year while lifting their forecasts for unemployment and inflation.
Speaking to reporters following the decision, Powell repeated his view that the central bank was “well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance”.
While the median expectation for two rate cuts in 2025 didn’t change, a number of officials lowered their projections. Seven officials now foresee no rate cuts this year, compared with four in March. Two others pointed to one cut this year.
The shift in projections appeared to show a wider divide among policymakers over the likely direction of rates, at least in 2025. Asked about the division, Powell downplayed the projections.
Given the high level of uncertainty in the economy, he said, “No one holds these rate paths with a lot of conviction.”
“Uncertainty about the economic outlook has diminished but remains elevated,” officials said in their post-meeting statement.
The US dollar and Treasury yields remained lower, while the S&P 500 held gains after the announcement. Traders priced in a 74 per cent probability that the Fed will lower rates by September, compared with 66 per cent prior to the meeting. About two cuts were priced in by year-end.
Policymakers dropped a line from the previous statement that said risks to both unemployment and inflation had risen.
In the run-up to this month’s meeting, many officials signalled their preference to hold rates steady for some time as they wait for clarity on how Trump’s economic policies will affect the trajectory of inflation and the broader economy.
Fed officials and economists broadly expect the administration’s expanded use of tariffs to weigh on economic activity and put upward pressure on inflation. The rate outlook from officials was in line with investors’ expectations for cuts this year prior to the announcement. New forecasts
Policymakers on Wednesday also issued updated quarterly rate projections and economic forecasts, the first since Trump unveiled sweeping tariffs on US trading partners — many of which he has since pared back or delayed.
Officials raised their median estimate for inflation at the end of 2025 to 3 per cent from 2.7 per cent. They marked down their forecast for economic growth in 2025 1.4 per cent from 1.7 per cent.
They forecast an unemployment rate of 4.5 per cent by the end of the year, up slightly from their previous estimate.
The projections reflect the thorny situation facing Fed policymakers.
Growing inflationary pressures typically suggest the Fed policy should restrain the economy with elevated rates, while weakening growth calls for stimulus through lower rates. Trump this year has repeatedly pushed for the Fed to cut rates, arguing the central bank under Powell has often been late to adjust policy.
Just hours before the decision Trump called the Fed chairman “stupid” and asked whether he could “appoint myself” to the central bank.
Neither employment nor inflation data have yet shown a substantial impact from tariffs. A measure of underlying consumer inflation rose in May by less than forecast, spurring Trump to renew his call for lower rates.
Powell said the committee continued to expect tariffs to work their way into final prices, but that it would take time.
“Ultimately the cost of the tariff has to be paid and some of it will fall on the end consumer,” he said. “We know that because that’s what businesses say, that’s what the data say from the past.”
“We know that’s coming and we just want to see a little bit of that before we make judgments prematurely,” he added.
Meanwhile, US employers added jobs at a solid pace last month and the unemployment rate held at 4.2 per cent. Fed officials have pointed to the labour market’s overall stability as an additional reason to take a patient approach toward adjusting interest rates.
Policymakers are also eager to guard against the possibility that tariff-driven price hikes lead to more persistent inflation. Survey data from the University of Michigan has shown a rise in Americans’ expectations for future inflation. Officials have acknowledged that development, but have broadly argued that longer-run expectations remain in check.
Officials must also try to assess Trump policy changes in other areas. The tax and spending bill working its way through Congress would fulfil some of Trump’s most prominent economic priorities, but would widen the US deficit over time and expand economic growth modestly, according to the nonpartisan Congressional Budget Office. The administration is also stepping up immigration enforcement, thereby limiting the supply of labour to some sectors, and pursuing a deregulatory agenda.
