The US Federal Reserve’s FOMC (Federal Open Market Committee) on Wednesday, 18 June 2025, decided to keep the benchmark interest rates maintained and ‘unchanged’ as the committee cited diminished yet elevated economic uncertainty in the US economy.
The US central bank kept its interest rates unchanged for the fourth consecutive policy announcement since January 2025. The US Fed has maintained its policy stance ever since President Donald Trump made his White House comeback for a second term in 2025.
The projections from the Fed’s quarterly ‘dot plot’ release showed that officials are expecting a 50 basis points or 0.5% interest rate cut in 2025. This chart holds data on each Federal Reserve official’s expectations for where interest rates will head in the future.
US Fed Meeting | 5 Key Highlights
Rates remain unchanged
The US benchmark interest rates were kept unchanged at the range of 4.25% to 4.5%, according to the Federal Reserve’s FOMC meeting verdict released on Wednesday, 18 June 2025.
The US central bank cited concerns of economic uncertainty in the nation as the reason behind holding the interest rates for the fourth consecutive time this year. This announcement also projected a hawkish policy where the risk of higher upcoming inflation looms over the US economy.
“In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 per cent,” said the FOMC in its official statement. “The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.”
Elevated economic uncertainty
The US Fed’s FOMC, in the official statement, and Chairman Jerome Powell, during the press conference, both addressed the elevated economic uncertainty in the United States due to the effect of the tariffs imposed by US President Donald Trump.
However, the committee and Powell both agreed that the uncertainties have diminished from their earlier levels, yet they remain elevated in the current market. “Uncertainty about the economic outlook has diminished but remains elevated,” said the US Fed FOMC in the statement.
Fed Chairman Powell also said that the uncertainty due to the Trump tariffs peaked in April 2025, and since then, it has been coming down over the months.
“Uncertainty peaked in April and since then has come down…” said Jerome Powell in the press conference.
US Inflation risk
The US Fed also flagged an inflation risk in the nation’s economy at a somewhat ‘elevated level,’ despite the lower unemployment rates and resilient labour market.
“Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated,” according to the FOMC’s official statement.
Powell in the press conference also highlighted that the goods inflation readings will rise over the course of summer.
“We’ve had goods inflation just moving up a bit. And of course, we expect, as you point out, we do expect, to see more of that over the course of the summer,” said Jerome Powell in the press conference.
Fall of labour demand & supply in US economy
Powell, in his media address, highlighted how the US economy is witnessing a fall in both labour demand and supply. The Fed Chair also highlighted that labour demand is softening, while labour supply is diminishing because of the falling immigration numbers.
“What you see is an unemployment rate that has been really solid and at a low, low level, not really increasing. It’s been in a good range, and well within the range of mainstream estimates of maximum employment. And that means, part of that is that labor demand and labor supply are kind of moving down at the same rate,” said Powell in the press conference.
“You’re right that the level of job creation has come down, but so has the supply of workers, the new supply. So you’ve seen the unemployment rate remain pretty stable at 4.2%, it’s been as high as 4.3%, but those are good numbers,” said Powell, highlighting the job concerns in the US economy.
On US layoffs, Powell commented that at the current market, there are very people who are getting laid off from their jobs, and that is bringing an “equilibrium” in the job market, controlling the unemployment rates.
“If you’re out of work, it’s hard to find a job, but there are very few people being laid off at this point. So that’s an equilibrium,” Powell said.
How did markets react to Fed’s policy hold?
The US stock markets fell after Jerome Powell started his press conference after the Federal Reserve FOMC decided to keep the benchmark interest rates unchanged for the fourth time this year.
At 2:40 p.m. (EDT), the Dow Jones Industrial Average dropped nearly 260 points, or 0.61%, to 42,159 points intraday on Wednesday, down from its 42,419 points in the early trading session. The index was trading flat at 42,197.79 points ahead of the US market close.
The Nasdaq Composite index also lost nearly 138 points or 0.70% intraday to 19,503.68 points, compared to its earlier same-day levels of 19,641.62 points, according to Marketwatch data. The index was trading 0.34% higher towards the end of Wednesday’s market session.
The S&P 500 index dropped 37.87 points or 0.62% intraday to 5,974.66 points, compared to its earlier level of 6,012.53 points. The index was trading flat at 5,986.43 points ahead of the US market close.
The Bloomberg US Dollar Spot Index rose 0.12% to 98.929 as of 3:41 p.m. (EDT) on Wednesday, 18 June 2025, after the US Fed’s policy announcement.
Read all US Federal Reserve-related news here
Read all stories by Anubhav Mukherjee
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
