The Federal Reserve kept interest rates unchanged for a fourth consecutive meeting on Wednesday, while issuing a more cautious economic outlook that suggests stagflation risks are now squarely on the table. The FOMC maintained the federal funds rate at 4.25% to 4.50%, as the central bank navigates a complex environment shaped by rising inflation and slowing growth.
Fed’s Rate Cut Path Narrows
While the Fed still projects two rate cuts in 2025, its longer-term rate trajectory has turned less dovish:
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2026 benchmark rate forecast revised up to 3.6% (from 3.4%).
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2027 benchmark rate now expected at 3.4% (vs 3.1% in March).
Fed Chair Jerome Powell emphasized that these projections are not set in stone. “Everyone would agree that they’re all going to be data dependent,” he noted.
Rising Inflation, Slowing Growth: A Classic Stagflation Setup?
The Fed raised its core PCE inflation forecast to:
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3.1% for 2025 (up from 2.8%)
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2.4% in 2026 (up from 2.2%)
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2.1% in 2027 (vs prior 2%)
These upward revisions suggest policymakers are preparing for stickier inflation, driven in part by:
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Tariffs imposed under President Donald Trump’s trade policy.
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A crackdown on immigration, which could strain labor supply and push wages higher.
Track Upcoming Economic Data for Insight
As the Fed turns increasingly data-dependent, market participants will need to monitor high-impact economic releases. Use the Economics Calendar to stay ahead of inflation prints, jobs data, and Fed commentary.
For investors focused on inflation-sensitive assets and commodities, the Commodities endpoint offers up-to-date pricing and sector impacts driven by macroeconomic shifts.
