What’s Keeping the Fed on Hold? | Presented by CME Group

Monetary Policy - The Federal Reserve maintained the Fed funds rate unchanged for the fourth consecutive time, continuing to monitor inflation and labor market data amid economic uncertainty [1] - The chairman highlighted uncertainty regarding the inflationary effects of tariff policy, noting that these effects are expected to become more apparent in the coming months [1] - Futures markets are pricing in over 60 basis points (0.6%) of rate cuts by the end of 2025 [2] Economic Projections - The Fed reduced its GDP growth projection for 2026 to 1.4%, a decrease of over 0.6% from current levels above 2% [3] - Inflation expectation projections were raised to 3%, raising concerns about a potential stagflationary period possibly fueled by exogenous forces [3] Upcoming Data - The CPI data on July 15th is expected to provide a clearer picture of the inflation path and could influence expectations for the next Fed rate cut [3]