Core Viewpoint - The Federal Reserve decided to maintain the federal funds rate target range at 4.25% to 4.50%, marking the fifth consecutive meeting without a rate change, amid pressure from the Trump administration for rate cuts [1][2]. Group 1: Federal Reserve's Decision and Market Reaction - The Federal Reserve's decision to keep rates unchanged was interpreted as slightly hawkish, leading to a decline in U.S. stocks and gold, while U.S. Treasury yields and the dollar index rose [1]. - The Fed's balance sheet reduction continues at a pace of $50 billion for Treasury securities and $35 billion for mortgage-backed securities [1]. Group 2: Internal Disagreements within the Federal Reserve - Among the 12 voting members of the Federal Open Market Committee, 9 supported maintaining rates, while two members voted for a 25 basis point cut, marking the first time since 1993 that two members expressed dissent [2]. - The dissenting members were nominated by Trump, raising concerns about the independence of the Federal Reserve amid political pressures [2]. Group 3: Federal Reserve's Stance on Independence - Federal Reserve Chairman Jerome Powell emphasized that the Fed will not adjust its rate path due to political pressure, asserting that the central bank's goals are to achieve maximum employment and stable inflation [3]. - Powell's statements reflect a strong commitment to maintaining the Fed's independence, which is supported at the congressional level [3]. Group 4: Economic Outlook and Risks - The Fed's statement highlighted increased economic risks and uncertainty, noting a slowdown in economic activity during the first half of the year and persistent high inflation [4]. - The Fed remains focused on balancing employment and inflation risks, with a cautious approach to future rate cuts depending on upcoming employment and inflation data [4]. Group 5: Future Projections - Analysts predict that the U.S. economy may face downward pressure in the third quarter, potentially leading to a 25 basis point rate cut in September [5]. - However, the impact of tariffs on inflation and subsequent fiscal measures may limit the likelihood of further rate cuts in the fourth quarter [5].

Core Viewpoint - The Bank of Japan's weighted inflation median remains below 2%, indicating a need for careful examination of whether stable inflation momentum has integrated into the Japanese economy [1] Group 1 - The current inflation metrics suggest that Japan has not yet achieved a sustained inflation rate of 2% [1] - The Bank of Japan is urged to closely monitor the trends in inflation to assess their impact on the economy [1]

Core Viewpoint - The Swedish central bank suggests that lowering interest rates will stabilize inflation to target levels and help enhance economic activity [1] Group 1 - Lowering interest rates is expected to stabilize inflation [1] - The action is aimed at achieving the central bank's inflation target [1] - Enhanced economic activity is a projected outcome of the interest rate reduction [1]

Core Viewpoint - The General Manager of the Bank for International Settlements, Carstens, emphasizes the critical importance of fiscal authorities curbing the ongoing growth of public debt as the era of ultra-low interest rates comes to an end [1] Group 1 - Fiscal authorities have a narrow window to improve fiscal conditions before public trust in their commitments begins to wane [1] - There should be no expectation that central banks can stabilize inflation in a short time frame and within a limited scope [1]

Core Viewpoint - The General Manager of the Bank for International Settlements, Carstens, stated that central banks should not expect to stabilize inflation in a very short time frame and within a narrow range [1] Group 1 - Central banks face challenges in managing inflation expectations effectively [1] - The statement emphasizes the need for a realistic approach to inflation stabilization [1] - Carstens suggests that the complexity of inflation dynamics requires more time and broader strategies [1]