WASHINGTON—As expected, the Federal Reserve’s Open Market Committee adjourned today without making any changes to rates, but signaled a rate cut could be coming in the second half of the year.
Before the announcement was made President Trump blasted the Fed for not moving on rates, and urged a cut of one point to 1.25 points. Instead, the Fed left its policy rate in a range of 4.25% and 4.5%.
Before continuing what had been several moves to reduce rates in 2024, the Fed is looking for either labor markets to soften or for evidence that President Trump’s tariffs have not led to significant price increases.
‘More Reactive Posture’
“The FOMC made no changes to the fed funds rate target at its May meeting. During his press conference, Chair (Jay) Powell conveyed the elevated level of uncertainty attached to the committee’s economic outlook and the need for the committee to be highly data dependent going forward,” said Curt Long, chief economist with America’s Credit Unions, in a statement. “This suggests that the Fed will have a more reactive posture than normal and raises the risk that it may act too late to stabilize the economy should growth weaken. Regardless, credit unions will serve as positive, local sources of financial stability within their communities.”
Following the meeting, the Fed released details around how the FOMC members view the future of rates.
“The new interest-rate projections highlighted a divergence among the 19 Fed officials who participated in the meeting,” the Wall Street Journal reported. “Ten of them expect the central bank to cut rates at least twice this year, a narrower majority than in March, and two penciled in one cut. Meanwhile, seven penciled in no changes this year, up from just four in March.”
