Uneventful

The FOMC concluded its two-day meeting and announced its decision to maintain Fed funds rate at 4.25%–4.50%, as widely expected. The decision reflects the Fed’s cautious, data-dependent approach amid economic uncertainties, including trade policy developments and persistent inflation concerns. Key takeaways: Economic Projections showed a stagflationary tilt, with median GDP growth for Q4 2025 revised down to ~1.2% (from 1.7% in March), core PCE inflation raised to 3.0% (from 2.8%), and unemployment slightly up to 4.5%. The 2026 outlook was largely unchanged. The “dot plot” (see below) indicated two 25-basis-point rate cuts expected by year-end 2025, though seven officials projected no cuts, and projections for 2026 were trimmed to one cut. No changes were made to the balance sheet runoff ($5B Treasury, $35B MBS monthly). The Fed noted potential inflationary pressures from President Trump’s tariffs, though recent pauses in some levies (e.g., China duties lowered from 145% to 55%) have reduced uncertainty. Powell downplayed recession risks despite staff warnings, focusing on upside inflation risks. Finally, Powell sidestepped questions about his future as Fed Chair (term expires May 2026) amid President Trump’s criticism, saying he’s focused on the Fed’s mission, not politics.

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