Fed Wrap – Diminishing Uncertainty Supports Two Cuts Through 2025

Ryan Weldon, from IFM’s Debt Investments team in New York, features in our Fed Wrap market update videos discussing central bank themes in debt markets, with a particular focus on the US Federal Reserve (Fed).

In this edition, Ryan discusses the outcomes of the June Fed meeting, the updated dot plot and summary of economic projections, and what it will take before the Fed decides to cut rates again.

At the June meeting, the Federal Reserve held rates, maintaining the upper band of their policy rate at 4.5%. In the statement, the Fed said that the unemployment rate remains low, and that uncertainty has diminished but remains elevated. In that vein, the Fed also removed comments from their previous statement that suggested that the risks of higher inflation and higher unemployment have risen. The takeaway from the statement is that over the past few months, uncertainty in the economy has decreased and every month where inflation shows softer impacts from the tariffs and recent uncertainty will bring the Fed closer to resuming cuts. This sentiment was echoed in the dot plot which showed the Fed maintained their median expectation for two cuts through 2025.