Labor Market - Non-farm payrolls increased by 139,000 in May, exceeding the forecast of 125,000 [1] - The unemployment rate remained steady at 4.2% [1] Inflation and Consumer Spending - CPI report indicated inflation at 2.4% year-over-year in May, with core inflation steady at 2.8% [2] - Headline retail sales dropped 0.9% month-over-month, a sharper decline than expected [3] - Excluding autos, retail sales rose 0.4% month-over-month, indicating a slowdown [3] Economic Outlook - The US economy continues to show resilience despite some moderation in retail sales [1][4] - Analysts believe the May data does not fundamentally challenge the narrative of a resilient economy, at least not yet [4] - The coming months will be crucial in determining whether this resilience can last, with inflation risks and policy changes ahead [4]

Economic Indicators - Major stock indexes are experiencing significant declines, with the Dow down -1000 points, S&P 500 down -150 points, and Nasdaq down -500 points, reflecting a broader market collapse of -4% to -6% [2] - The U.S. Bureau of Labor Statistics reported an unexpected increase in nonfarm payrolls, with +228K jobs created in March, surpassing the +140K estimate, while the unemployment rate rose to +4.2% [6][7] - Hourly wages remained steady at +0.3%, with year-over-year growth decreasing to +3.8%, the lowest since July [8] Federal Reserve Actions - The Federal Reserve has shifted its stance dramatically, indicating a potential for five interest rate cuts this year, with a 100% chance for a cut in June [4][5] - If all proposed cuts occur, the Fed funds rate could be reduced to +3.00-3.25% by the end of the year, suggesting a long-term expectation of high tariffs impacting the economy [4][5] Trade Relations - China has implemented a retaliatory measure by imposing 34% additional tariffs on all imported U.S. goods, which is expected to adversely affect U.S. agriculture and chemical sectors, notably impacting companies like DuPont [3]

Core Viewpoint - Recent indicators suggest that economic activity is expanding at a solid pace, with a stable low unemployment rate and elevated inflation levels [1][2]. Monetary Policy Decisions - The Federal Open Market Committee (FOMC) decided to maintain the federal funds rate target range at 4-1/4 to 4-1/2 percent, with a commitment to support maximum employment and return inflation to a 2 percent objective [3][8]. - The FOMC will slow the pace of decline in its securities holdings, reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion starting in April, while maintaining a cap of $35 billion on agency debt and mortgage-backed securities [3][8]. - The interest rate paid on reserve balances will remain at 4.4 percent, effective March 20, 2025 [8]. Economic Monitoring - The FOMC will continue to assess incoming data and the evolving economic outlook, being prepared to adjust monetary policy if risks emerge that could impede the attainment of its goals [4][5]. - The assessments will consider a wide range of information, including labor market conditions, inflation pressures, and international developments [5]. Voting and Consensus - The monetary policy action was supported by all voting members except Christopher J. Waller, who preferred to maintain the current pace of decline in securities holdings [6].