Those lower mortgage rates you’ve been dreaming about won’t come true this summer.
Same goes for credit-card bills and auto loans.
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The Federal Reserve Board kept interest rates steady today.
It also signaled when U.S. consumers, businesses and investors might expect a shift in monetary policy.
The Fed’s policy-making Federal Open Meeting Committee dropped several forecast clues for future rate cuts later this year and next.
Fed Chairman Jerome Powell speaks during a news conference following a Federal Open Market Committee meeting in Washington on Nov. 1, 2023. The Fed on June 18, 2025, held interest rates steady. Photo: Al Drago/Bloomberg via Getty Images
FOMC holds interest rate steady
The Fed’s dual mandate requires a cautious approach to monetary policy to keep both inflation and unemployment relatively low.
It’s a delicate balance.
Higher interest rates lower inflation but reduce jobs. Lower interest rates lower unemployment rates but increase inflation.
Related: Will the Fed cut interest rates at its meeting this week?
Both the May CPI and jobs reports were cooler than expected but housing starts and retail spending saw surprise slumps. The full impact of President Trump’s tariff and tax policies remains unknown across the post-pandemic economy for an estimated 30-90 days.
The FOMC controls the Federal Funds Rate, which banks charge each other overnight to borrow money.
It directly or indirectly affects the cost of borrowing money for all Americans.
This includes Treasury bond yields, especially the 10-year Treasury note, in determining how much banks charge for mortgage rates.
The FOMC last cut the Federal Funds Rate in December 2024.
The FOMC announced at its monthly meeting today to hold the Federal Funds Rate at 4.25% to 4.50% for June.
Trump maintains that lower interest rates are crucial to keep the U.S. economy from sliding into recession, or worse, stagflation.
Fed official revamps interest-rate cut forecast for rest of this year
Lower interest rates can’t come soon enough for President Donald Trump, who’s been slamming Fed Chair Jerome Powell with escalating demands for a deep cut since taking office five months ago.
Trump’s ripped Powell as “stupid” just hours before the Fed’s announcement, adding “maybe” Trump himself should be the next central bank chair. He has threatened to nominate a “shadow president” before Powell’s 10-year term expires in May 2026.
Trump maintains that lower interest rates are crucial to keep the U.S. economy from sliding into recession, or worse, stagflation.
FOMC hints at next interest rate cut
The FOMC released its quarterly “dot plot.” This chart displays where each individual Fed member thinks the Federal Funds Rate will be for the current year, the next two years, and the long term.
Key economic indicators used to determine the “dots’’ on the chart include:
- Changes in real GDP
- Core Personal Consumption Expenditures (PCE)
- Core inflation
- Unemployment rate
The forecasts are not set in stone. The March 2025 dot plot projected two 0.25-percentage-point rate cuts this year, two more of 0.25 point in 2026, and one 0.25 point in 2027.
Related: Federal Reserve prepares strong message on long-term interest rates
This was before the thrust of tariff-driven inflation risks, potential hikes in the federal deficit and the Middle East conflict raised market and economic jitters.
The next rate cut might come in September, and that may be it for the year, according to some analysts.
“The Fed can afford to wait on tariff and oil impacts to develop,” former Fed Chairman Alan Binder said today in an interview with CNBC prior to the announcement.
Slumping housing starts are “one of the sectors the Fed watches most closely,” Binder said, referring to the stagnation in the housing industry.