The US Federal Reserve held its fourth meeting of 2025 from Tuesday (June 17) to Wednesday (June 18) against a backdrop of trade tensions, spurred on by the Trump administration’s tariffs.
The central bank met analysts’ expectations by holding its benchmark rate in the 4.25 to 4.5 percent range.
Chair Jerome Powell stated that the Fed’s dual mandate of maximum employment and stable prices remains in balance, noting that the US economy is solid. He added that the labor market is not a source of inflationary pressures.
“For the time being we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell said in his post-meeting comments.
The Fed chair also drew attention to personal consumption expenditures (PCE) prices for May, saying:
‘Estimates based on the Consumer Price Index and other data indicate that total PCE prices rose 2.3 percent over the 12 months ending in May, and that, excluding the volatile food and energy categories, core PCE prices rose 2.6 percent.’
While official PCE price index data will not be released until June 27, the figures mentioned by Powell indicate that the index is up compared to April, when it came in at 2.1 percent overall and 2.5 percent less food and energy.
The PCE is the favored inflation measure used by the Fed when setting its benchmark rate.
Powell also noted slowing gross domestic product growth in Q1, attributing the change to greater spending by importers that worked to make purchases ahead of the implementation of import tariffs by the Trump administration.
The effects of tariffs have yet to be fully felt in the economy, as many retailers are still working through inventories purchased before the tariffs took effect. Powell asserted that it remains to be seen whether the price increases will be a one-time shock, or will have a more persistent impact on inflation.
Before the Fed announcement, President Donald Trump told reporters at the White House that he is dissatisfied with Powell and joked about appointing himself as Fed chair. Trump has previously expressed disdain for Powell, saying that he should be working more quickly to bring down the federal funds rate to stimulate the economy.
Powell was appointed Fed chair by Trump in 2017 and will hold the position until May 2026.
Gold was relatively flat after the Fed news, losing just 0.29 percent to US$3,379.48 per ounce. Silver declined for most of the morning, losing 1.03 percent, but was still near recent highs at US$36.72 per ounce at 3:00 p.m. EST.
The S&P 500 (INDEXSP:INX) was also flat, recording a 0.08 percent decline to reach 5,578. The Nasdaq-100 (INDEXNASDAQ:NDX) gained 0.49 percent to come in at 21,822, and the Dow Jones Industrial Average (INDEXDJX:.DJI) lost 0.12 percent, coming to 42,193.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.