The Federal Reserve left interest rates unchanged within the range of 4.25% to 4.5%, citing heightened uncertainty about the economic outlook. In its statement, the Fed acknowledged increased risks of both higher unemployment and inflation, emphasizing vigilance regarding its dual mandate. Following the announcement, stocks initially fluctuated but later declined, with the SPDR S&P 500 ETF hitting fresh daily lows.
Economists had expected the central bank to maintain its stance at this meeting. Prior to the announcement, traders priced in a 27% chance of a rate cut in mid-June and a 62% likelihood for a cut by July 30. These probabilities remained largely unchanged after the release.
Neil Dutta, head of US economics at Renaissance Macro Research, noted that while the Fed believes in a solid economic pace and labor market conditions, cooling trends in labor demand, hiring rates, and average hourly earnings suggest otherwise. He questioned the Fed’s assumption that the labor market would stabilize on its own, implying a potential need for policy intervention.
— new from Sherwood News
