Fed Leaves Rates Unchanged For Now.
(Let's see if the Banks/CUs hold off too, or if more keep slashing savings rates anyway for profit).
NY Times:
"Fed Sees Higher Inflation and Lower Growth Ahead.
Officials at the Federal Reserve left interest rates unchanged, as they brace for the effects of President Trump’s policies on trade, taxes and immigration. Fed Chair Jerome Powell said that “uncertainty is unusually elevated.”
"The Federal Reserve kept interest rates unchanged again in June, keeping them paused at a range of 4.25 percent to 4.5 percent, where they have been since January.The Fed’s decision, along with new economic projections and a news conference with Jerome H. Powell, the chair, shed additional light on the path ahead for borrowing costs.Here are the key takeaways:
No urgency to cut rates quickl
The Fed sees little urgency to lower interest rates anytime soon. Mr. Powell repeatedly said the central bank was “well positioned” to navigate through what is still a very uncertain economic environment given President Trump’s tariffs and other policies that could weigh on economic growth.He pointed to the fact that unemployment is still low, wages are still moving up and growth overall is still “decent.
Unanimous about today but not the path ahead
The decision to hold interest rates steady was unanimously supported by all voting members of the Fed. Looking ahead, finding a consensus among all the policymakers may get more challenging.While most officials stuck with earlier forecasts that the Fed will be able to cut borrowing costs by half a percentage point this year, or two quarter-point moves, nine of the 19 policymakers forecast the Fed doing less.Seven penciled in no more reductions this year, while two predicted just one quarter-point move.Mr. Powell sought to play down any type of dissension ahead. “No one holds these rate paths with a lot of conviction,” he said.
Stagflation is still a risk.
While Mr. Powell did not use this word directly during the news conference, the outlook sketched out by officials in their new projections much more closely resembles a stagflationary shock than what they penciled in just three months ago.That entails inflation accelerating while unemployment rises and growth turns more sluggish. Such a situation would put the Fed’s dual mandate of maximum employment and stable prices in tension.Mr. Powell warned that the Fed could find itself in a situation in which its goals of 2 percent inflation and a healthy labor market are at odds with one another. He said officials would consider the distance from those goals and the time needed to get back to those desired levels."
