Summary of the Fed Meeting on June 18, 2025: Rates Remain Unchanged

Why the Rate Remained Stable: Analyzing the Decision

In June 2025, the U.S. Federal Reserve announced its decision to keep the federal funds rate within the 4.25% to 4.50% range. This was an expected move amid the ongoing fight against inflation, which stood at 2.4% in May 2025 according to the Consumer Price Index (CPI), above the Fed’s 2% target.

At the same time, the Fed is closely watching core inflation (Core PCE), which excludes volatile food and energy prices. The central bank's own forecast projects core inflation to reach 3.1% in 2025, reflecting persistent underlying price pressures.

The Fed’s main argument was that inflation remains above the target despite signs of slowing. Additionally, the Fed lowered its GDP growth forecast for 2025 while raising inflation and unemployment expectations.

Powell’s Tone: Hawkish or Dovish?

At the press conference, Jerome Powell presented a balanced stance. While he did not rule out future rate cuts, the current situation calls for vigilance and a continued fight against inflation. Overall, his remarks struck a balanced tone, neither overly dovish nor aggressively hawkish.

Powell emphasized that Fed decisions are data-dependent — meaning they rely on current and incoming economic data. This approach avoids firm commitments in advance, allowing the committee to carefully monitor inflation, employment, and economic growth and adjust policy accordingly. Such flexibility helps prevent premature moves and better adapt to changing conditions.

Market Reaction, Forecasts, and Expectations

Following the Fed meeting on June 18, 2025, markets responded moderately: some analysts expressed cautious optimism, while others voiced concern over the prolonged inflation battle.

U.S. stock indices showed modest volatility:

• The S&P 500 dipped 0.1%, closing at 5,987.93 points.
• The NASDAQ Composite rose 0.1% to 19,526.90 points.
• The Dow Jones Industrial Average dropped 0.1%, ending at 42,171.66 points.

The cryptocurrency market also saw slight fluctuations:

• Bitcoin traded around $104,870, up 0.43%.
• Ethereum fell 0.65% to $2,517.82.

This neutral market reaction was widely expected. As noted in our previous analysis, the scenario of unchanged rates was priced in by most participants. This was clearly reflected on prediction markets like Polymarket, where the probability of a rate hold stood near 99% before the announcement.

The Fed reaffirmed the possibility of two incremental rate cuts totaling about 50 basis points by the end of 2025. Still, the committee stressed that future actions depend on incoming data.

The next Fed meeting is scheduled for July 2025, when new guidance will be provided.

Political Context of Powell’s Decision

Politics remain an important backdrop to the Federal Reserve’s decisions. Recently, the administration of President Donald Trump has voiced concerns over current monetary policy and repeatedly called for rate cuts to support economic growth.

Despite this pressure, Fed Chair Jerome Powell and his team maintain a cautious and measured approach, emphasizing the need to adhere to a data-dependent strategy — basing decisions on objective economic indicators rather than political expectations.

That said, political pressure from the White House and disagreements within government circles could influence the pace and nature of future decisions. Speculation about leadership changes within the Fed has been ongoing in the media and among experts, though no official announcements have been made.

This situation adds a degree of uncertainty for markets and financial participants closely watching any signs of shifts in Fed policy.

Nevertheless, the Fed currently aims to balance its independence with the necessity of considering a broad range of factors that affect the country’s economic stability.