The Fed kept rates unchanged. But the show goes on 🍗
On June 18, the Fed held rates steady, giving no signal of easing to the markets. The QT (liquidity tightening) program also continues.
The statement was neutral, but the tone is getting tougher: Powell made it clear that rates won’t be cut “at Trump’s request.”
💬 Political backdrop:
Trump lashed out at the Fed chair again, calling him a “drag” and “dumb,” demanding an urgent rate cut and claiming he’d do a better job himself.
What did Powell say?
⦁ The rate stays,
⦁ No rush to cut,
⦁ Waiting for more confidence that inflation is really falling,
⦁ New risk factor — tariffs that could push prices up.
🔍 What does the Fed actually look at when making decisions?
⦁ Inflation (CPI and Core CPI)
⦁ Labor market (unemployment rate, non-farm payrolls)
⦁ Economic growth (GDP)
⦁ Personal Consumption Expenditures Index (PCE) — the main inflation gauge
Right now, all these indicators are borderline — the numbers don’t give a clear reason for either easing or tightening.
📈 Updated Fed forecasts:
⦁ GDP: 1.4% (lowered)
⦁ Inflation: 3% (up)
⦁ Unemployment: 4.5% (up)
⦁ Still projecting 2 rate cuts in 2025, but Powell stressed: “this is just a scenario, not a promise.”
📌 What this means for traders: 3 scenarios
1. Base (stable):
Fed waits for data → rate unchanged until fall → markets move sideways, volatility on data releases.
2. Bearish:
Inflation stays high or rises → Fed stays hawkish longer → pressure on stocks and crypto, dollar and Treasuries rise.
3. Bullish (unlikely):
Inflation drops sharply, economy slows → Fed cuts rates → markets rally, including crypto.
There’s only one Fed meeting left before the end of summer — August is traditionally a break. This means any statements from Fed officials in the coming month will be extra significant: even a slight shift in tone could either push markets higher or crush the current bullish mood.
The Fed makes decisions based on data, not emotions. Traders should do the same — don’t guess, calculate your options. Be ready for multiple scenarios and keep an eye on what and how Fed officials are saying.
