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Fed Holds Rates Amid Inflation Rise and Economic Slowdown Forecasts

The Federal Reserve maintained current interest rates between 4.25% and 4.5% while projecting inflation will surpass 3% in 2025. Economic growth is expected to slow to 1.4%, with tariff effects slowly impacting consumer prices. Markets remained flat in the U.S., though Asia-Pacific stocks declined. Geopolitical tensions persist as Israel denies seeking regime change in Iran, and investor interest shifts toward emerging markets.

Fed Holds Rates Amid Inflation Rise and Economic Slowdown Forecasts

Federal Reserve Maintains Interest Rates, Signals Potential Cuts

On Wednesday, the U.S. Federal Reserve opted to keep interest rates steady within the 4.25% to 4.5% range, a level maintained since last December. Alongside this decision, the Fed’s latest "dot plot" forecast continues to suggest two potential rate cuts by the end of 2025, reflecting an evolving economic outlook.

Inflation Expected to Edge Above 3% in 2025

The central bank updated its inflation projections, predicting that the personal consumption expenditures (PCE) price index will exceed 3% next year — an upward revision from the previous forecast of 2.8%. This surge points to sustained inflationary pressures despite recent efforts to curb them.

Growth Outlook Dims Amid Emerging Inflation Concerns

Along with the inflation update, the Fed lowered its economic growth forecast to 1.4% for 2025, down from an earlier 1.7% estimate. While the economy shows resilience now, Federal Reserve Chair Jerome Powell acknowledged that growth will inevitably slow. Caution over a possible stagflation scenario—a combination of slow growth and rising prices—is growing within policy circles.

Tariffs’ Delayed Impact on Inflation

Powell emphasized that tariffs imposed on imports are beginning to push prices higher, with increases set to reach consumers over time due to the slow transmission of costs along supply chains. Though recent indicators like a stable unemployment rate of 4.2% and modest consumer price index (CPI) increases suggest short-term stability, the Fed anticipates more inflationary ripple effects to surface in the coming months.

Market Reaction: U.S. Stocks Steady, Asia Markets Dip

Following the Fed announcement, U.S. markets showed little movement: the S&P 500 dropped by 0.03%, the Dow edged down 0.1%, and the Nasdaq slightly rose by 0.13%. Oil prices also remained relatively flat. In contrast, Asia-Pacific markets experienced sharper declines, with Hong Kong’s Hang Seng Index falling nearly 2%. Meanwhile, Japan’s shares in Nippon Steel jumped over 3% after closing a significant acquisition.

Geopolitical Tensions: Iran and US Policy Updates

In the international arena, Israeli President Isaac Herzog stated that regime change in Iran is not an official goal of his government. Instead, the focus remains on curtailing Iran's nuclear program. Herzog also mentioned ongoing backchannel diplomatic efforts to ease regional tensions.

Meanwhile, former U.S. President Donald Trump expressed uncertainty about ordering military strikes against Iran, despite escalating conflict concerns. U.S. authorities are arranging evacuation flights and cruise options for American citizens leaving Israel amid the unrest.

Investor Sentiment Shifts Toward Emerging Markets

Institutional investors appear increasingly optimistic about developing economies, including Vietnam and India, even as the U.S. nears the end of a 90-day tariff pause on these countries. Bank of America’s latest Fund Manager Survey reveals growing enthusiasm toward emerging markets, signaling potential pivots in global investment strategies.

Diplomatic Strains Between U.S. and India

A recent phone call between Indian Prime Minister Narendra Modi and Donald Trump highlighted diplomatic friction. Modi firmly rejected any notion of U.S. mediation between India and Pakistan, emphasizing a unified political stance against external interference. The Indian government also denied discussing any trade agreements during the call, which was reportedly initiated by Trump.

Germany Reevaluates Safety of Its Gold Reserves Stored in New York Amid Trump Return
Germany Reevaluates Safety of Its Gold Reserves Stored in New York Amid Trump Return

Germany's Bundesbank holds one-third of its 3,352 tonnes gold reserves in New York, raising safety concerns following Trump's presidency return. Traditionally held at the Fed since the Cold War, public and political debate has intensified over the risks of storing assets abroad amidst geopolitical tensions and the changing U.S. stance. Calls for repatriation grow while the Bundesbank maintains confidence in the Federal Reserve.

Christine Lagarde’s Vision: Can the Euro Challenge the US Dollar’s Dominance?
Christine Lagarde’s Vision: Can the Euro Challenge the US Dollar’s Dominance?

European Central Bank President Christine Lagarde envisions the euro expanding its international role amid shifting geopolitical dynamics and waning confidence in the US dollar. While the dollar remains the dominant global reserve currency, the euro, accounting for about 20% of reserves, is gaining momentum. Analysts express divergent views on the euro’s potential to challenge the dollar, citing political and economic hurdles facing Europe. Despite obstacles, growing investor interest suggests the euro could strengthen further.

OPEC+ Approves July Oil Output Increase of 411,000 Barrels Per Day
OPEC+ Approves July Oil Output Increase of 411,000 Barrels Per Day

OPEC+ has agreed to raise oil output by 411,000 barrels per day in July, consistent with previous months, to steadily restore supply amid a stable global economic outlook. The group, including Saudi Arabia and Russia, is balancing increased production with market fundamentals and efforts to manage prior overproduction. Oil prices have recently bounced from a four-year low, while global demand is forecasted to grow through 2025.

Market Update: Trump Raises Steel Tariffs, Upcoming Trump-Xi Trade Talks
Market Update: Trump Raises Steel Tariffs, Upcoming Trump-Xi Trade Talks

In May, the S&P 500 and Nasdaq posted their strongest gains since November 2023 amid eased trade tensions. However, U.S.-China relations have become strained again after President Trump announced raising steel tariffs from 25% to 50%. Upcoming discussions between Trump and Xi Jinping could influence market direction. Inflation remained steady with a 2.1% annual rise in the PCE index. The May jobs report will be critical in assessing economic resilience amid heightened trade tensions and tariff expansions. Investors are advised to consider short-term bonds due to risks in long-term holdings.

China Rejects US Claims of Geneva Deal Breach Amid Rising Tensions
China Rejects US Claims of Geneva Deal Breach Amid Rising Tensions

China has rejected U.S. accusations of breaching the Geneva trade agreement, accusing Washington of undermining the pact through increased export restrictions and visa revocations. While bilateral trade talks face challenges due to diplomatic differences, tensions extend beyond economics, with rising military concerns in the Indo-Pacific. Both nations remain cautious amid ongoing disputes.

Russian Ruble Surges as Best-Performing Currency in 2025 Amid Economic Challenges
Russian Ruble Surges as Best-Performing Currency in 2025 Amid Economic Challenges

The Russian ruble has emerged as the world’s best-performing currency in 2025, appreciating over 40% this year amid ongoing sanctions and declining oil prices. Key factors include high domestic interest rates, restrictive capital controls, and mandatory export revenue conversion. Despite the rally, challenges such as falling oil prices and potential geopolitical shifts cast doubt on the ruble's sustainability.

Europe Markets Rise as China-U.S. Trade Talks Boost Global Sentiment
Europe Markets Rise as China-U.S. Trade Talks Boost Global Sentiment

European stock markets are expected to open higher, buoyed by ongoing China-U.S. trade negotiations in London. The U.K. unemployment rate rose marginally to 4.6% in the three months to April, in line with forecasts. Investors also await additional economic data from Europe today, including Italy's industrial production and earnings reports from British companies.

Indonesian Economist Critiques US Protectionism Amid Global Trade Shifts
Indonesian Economist Critiques US Protectionism Amid Global Trade Shifts

Indonesian economist Dr. Hendri Saparini criticised the US for adopting protectionist trade policies under Trump while urging other countries to liberalize markets. She noted the limited impact of US tariffs on Indonesia’s economy, highlighted opportunities for India-Indonesia cooperation, and discussed Indonesia’s strategic partnerships with both the US and China amid evolving global economic and security challenges. Dr. Saparini called for stronger regional collaboration, balanced trade policies, and addressing domestic economic challenges such as unemployment and industrial competitiveness.

What to Expect from the Fed's June Meeting: Interest Rates and Economic Outlook
What to Expect from the Fed's June Meeting: Interest Rates and Economic Outlook

The Federal Reserve's June meeting, concluding Wednesday, is anticipated to keep interest rates unchanged but provide crucial insight into economic forecasts. With inflation remaining tame and geopolitical risks looming, the Fed faces pressure to balance cautious policy with the potential for rate cuts later in the year. Market watchers will closely monitor updated projections on inflation, employment, and growth as the Fed maintains a wait-and-see stance.

Federal Reserve Likely to Delay Interest Rate Cut Until October Amid Economic Uncertainty
Federal Reserve Likely to Delay Interest Rate Cut Until October Amid Economic Uncertainty

Following the Federal Reserve's recent decision to hold interest rates steady, markets have dampened expectations for a September rate cut. Chair Jerome Powell highlighted ongoing economic uncertainties and inflation risks, especially from tariffs, signaling a cautious stance. Experts now predict possible rate reductions in the final quarter, with key inflation data and the Fed’s upcoming Jackson Hole meeting drawing heightened attention.

Fed Chair Powell Assures Trump of Non-Political Basis for Rate Decisions
Fed Chair Powell Assures Trump of Non-Political Basis for Rate Decisions

Federal Reserve Chair Jerome Powell met with President Donald Trump at the White House, emphasizing that monetary policy decisions will continue to rely on objective economic analysis rather than political influence. The central bank reaffirmed its commitment to address inflation, growth, and employment based on incoming data. Despite Trump's calls for lower rates, the Fed maintains a cautious stance amid tariff uncertainties and expects to hold rates steady for the near term.

US Federal Reserve Reaffirms Independence Amid Trump’s Rate Cut Pressure
US Federal Reserve Reaffirms Independence Amid Trump’s Rate Cut Pressure

Following a rare public statement, the US Federal Reserve has reaffirmed its non-partisan role in setting monetary policy. This comes after Chair Jerome Powell met with President Trump, who has been pressuring the Fed to reduce interest rates. The Fed emphasized that decisions will be made based on objective economic data, maintaining its independence despite political pressures.

Fed Governor Warns Tariffs Could Reverse Inflation Gains and Impact Labor Market
Fed Governor Warns Tariffs Could Reverse Inflation Gains and Impact Labor Market

Federal Reserve Governor Lisa Cook cautions that tariffs implemented under the Trump administration may undermine recent gains in reducing inflation and pose risks to the labor market. Despite inflation hovering near the Fed's target, Cook stressed that trade-related price pressures and persistent inflation expectations complicate further progress. The Federal Reserve is expected to hold interest rates steady in the upcoming June policy meeting amid uncertainty, with officials divided over the magnitude and timing of tariff impacts on future monetary policy adjustments.

Trump Urges Fed Chair Powell for Full-Point Interest Rate Cut Amid Strong Jobs Data
Trump Urges Fed Chair Powell for Full-Point Interest Rate Cut Amid Strong Jobs Data

President Donald Trump has called on Federal Reserve Chairman Jerome Powell to cut interest rates by a full percentage point following a robust May jobs report showing 139,000 new payrolls, exceeding expectations. Trump criticized Powell's approach, labeling it a "disaster" and asserting lower borrowing costs are essential for economic growth. The president’s demand continues the ongoing tension over monetary policy during his term.

U.S. Treasury Yields Stabilize Following Sharp Declines Amid Weak Economic Data
U.S. Treasury Yields Stabilize Following Sharp Declines Amid Weak Economic Data

After steep declines driven by disappointing May manufacturing and payroll data, U.S. Treasury yields stabilized on Thursday. The manufacturing PMI fell below the expansion threshold, and private sector payrolls missed forecasts, raising concerns over labor market weakness. However, analysts consider the data insufficient to signal an imminent recession. Market attention now turns to the upcoming May non-farm payrolls and unemployment rate reports.

Vance Joins Trump in Criticizing Fed’s Reluctance to Cut Interest Rates
Vance Joins Trump in Criticizing Fed’s Reluctance to Cut Interest Rates

Vice President JD Vance has joined former President Trump in pressing the Federal Reserve to lower interest rates following recent inflation data showing only slight increases. The move highlights growing political pressure on the Fed, which has kept rates steady despite inflation levels slightly above the 2% target. Market analysts note the Fed faces a tough choice balancing easing concerns with economic uncertainties, with a rate decision due next week.

Israel-Iran Conflict Forces US to Reassess 'Asia First' Strategy Amid Rising Tensions
Israel-Iran Conflict Forces US to Reassess 'Asia First' Strategy Amid Rising Tensions

The escalating conflict between Israel and Iran has disrupted the US' strategic pivot towards Asia, with President Trump considering military action against Iran. This shift undermines efforts by Vice President JD Vance and Defense Undersecretary Elbridge Colby to reduce US involvement in West Asia and concentrate on countering China. The renewed focus complicates America’s foreign policy goals and reignites debates on its global role amid regional security challenges.

Pakistan’s Asim Munir Nominates Trump for Nobel Peace Prize Over India-Pakistan Conflict
Pakistan’s Asim Munir Nominates Trump for Nobel Peace Prize Over India-Pakistan Conflict

Pakistan’s Army Chief General Asim Munir has recommended former US President Donald Trump for the Nobel Peace Prize, citing his role in preventing a nuclear war between India and Pakistan after escalating tensions earlier this year. While the White House praised Trump’s efforts, India denies US mediation in the ceasefire. The recent diplomatic engagements between leaders underscore the complexity of the situation. Trump's claim of stopping the war and his vision for broader peace agreements highlight ongoing geopolitical dynamics in the region.