Fed Maintains Rates, Projects Two Cuts This Year

The Federal Reserve has announced it will maintain interest rates in the range of 4.25%-4.5% but anticipates two quarter-point cuts later this year amidst rising inflation and slowing economic growth. The Fed's updated economic forecasts, detailed in its Summary of Economic Projections, indicate an increased inflation outlook for 2025 and a lowered growth forecast, with projections suggesting a decline in the federal funds rate to 3.9% by year-end. Despite this, there is notable disagreement among policymakers, with some advocating for no cuts at all and others suggesting more aggressive reductions. The uncertainty surrounding trade policies and their economic implications has added complexity to the Fed's decision-making process. Futures markets reflect this expectation, pricing in two rate cuts in 2025 and a likelihood of action as early as the June meeting. Fed Chair Jerome Powell is expected to elaborate on these developments in an upcoming press conference.