June FOMC meeting takeaways

With an updated Summary of Economic Projections, the Fed sees growth slowing and inflation increasing

June 19, 2025 03:30 pm

Federal Reserve Chair Jerome Powell | Paul Morigi/"Federal Reserve Chair Jerome Powell spoke at the Hutchins Center on Fiscal and Monetary Policy on the outlook for the economy, inflation, and the changing labor market." (CC license)

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To no one’s surprise, the Fed held rates steady in the June FOMC meeting.

As is the case in this modern age of monetary policy, the actual rate decision was well-telegraphed and wasn’t what moved markets.

In terms of what did move markets…the FOMC statement saw minor changes to wording but, generally, there was very little for market participants to glean.

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More notably, the updated Summary of Economic Projections was substantial compared to the last update in March.

Considering how much has changed since March (Liberation Day and an emerging war with Iran, to name a few things), it’s no surprise to see a significant change in the ways FOMC members see the economy evolving.

Based on the table below, we can surmise that:

The FOMC sees growth slowing more than what committee members expected in March.
The FOMC expects the unemployment rate to tick up marginally but they’re still not concerned about the labor market.
The committee further ratcheted up their inflation forecast for 2025 from 2.7% to 3%, noting the risk of tariffs being larger than what they expected.

Interestingly, the one thing the FOMC did not change is how many rate cuts they expect to enact this year.

The number remained at two by year-end. However, beneath the surface, we actually saw more FOMC members move toward no cuts for this year — just enough to move the market on the median projection:

Overall, the theme of the June meeting was a Fed truly committed to doing as little as possible.

With a five-year monetary policy framework review underway, a Fed chair’s term ending in 2026, uncertainty around tariffs, a potential oil shock from the Middle East and a US president demanding the Fed cut rates by at least 200 basis points, it appears Powell’s main goal is just to get to the end of his term in one piece.

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