Monetary Policy - The Federal Reserve's recent action is characterized as a risk management type of rate cut, with limited support for a 50 basis point cut [1][3] - The target range for the federal funds rate has been lowered from 4.25%-4.5% to 4.00%-4.25%, marking the first rate cut of the year [2][3] - The median forecast for the federal funds rate is projected to be 3.6% by the end of this year, lower than previous estimates [6] Labor Market - Revised employment data indicates a weakening labor market, with the unemployment rate rising to 4.3% and job growth slowing significantly [3][4] - The average monthly increase in non-farm jobs has dropped to 29,000, suggesting a decline in labor demand [3][4] - The Federal Open Market Committee (FOMC) predicts the unemployment rate will reach 4.5% by the end of this year [4] Inflation - The inflation rate is projected to rise, with the overall Personal Consumption Expenditures (PCE) index expected to increase by 2.7% year-on-year [4][5] - Core PCE inflation is anticipated to rise by 2.9%, with tariffs contributing approximately 0.3-0.4 percentage points to core PCE inflation [5][33] - Long-term inflation expectations remain stable, with the FOMC members forecasting a decline to 2.1% by 2027 [5][6] Economic Growth - The U.S. GDP growth rate for the first half of the year is estimated at 1.5%, down from 2.5% the previous year, primarily due to a slowdown in consumer spending [3][4] - The FOMC's median forecast for GDP growth is slightly adjusted to 1.6% for this year and 1.8% for next year [3][6] Tariffs - The impact of tariffs on inflation is diminishing, with the potential for "tariff inflation" being less persistent than previously thought [1][5] - Tariffs have been identified as a factor influencing both inflation and the labor market, with companies absorbing some of the tariff costs [8][33] Federal Reserve Independence - The Federal Reserve emphasizes its commitment to maintaining independence, despite external political pressures [1][8] - Discussions regarding the independence of the Federal Reserve are deemed inappropriate in the context of ongoing legal matters involving board members [1][8]

Core Viewpoint - The current economic situation is unique, with risks related to both employment and inflation targets [1] Group 1 - Future actions may bring policy rates closer to neutral [1] - It is uncertain whether data will become clearer by the next policy meeting [1]

Core Viewpoint - The President of the Cleveland Federal Reserve, Hammack, expressed that the Federal Reserve's policy is "close to neutral" [1] Group 1 - The statement indicates a potential shift in monetary policy stance, suggesting that the Federal Reserve may be approaching a balanced position regarding interest rates [1]

Core Viewpoint - The Federal Reserve's policy is perceived to be approaching a neutral stance [1] Group 1 - The Federal Reserve's current policy is seen as nearing neutrality, indicating a potential shift in monetary policy direction [1]