The Federal Reserve is widely expected to leave the federal funds target range unchanged at 4.25%–4.50% at the June FOMC meeting, marking the seventh consecutive hold since December. According to the CME FedWatch Tool, there is a 99.8% implied probability that the Fed will stay on pause this week, reinforcing consensus around a cautious, data-dependent policy stance.
While no move is anticipated in this meeting, financial markets are increasingly pricing in the first rate cut by September. Bond futures traders see about a 66% chance of a cut happening then, according to data from the CME FedWatch Tool, while they see a 94% chance that the Fed cuts at least twice by year-end. The shift in expectations reflects growing confidence that inflation is cooling sustainably alongside a resilient but moderating labor market.
Right now, monthly government data shows that inflation is cooling while the labor market remains relatively healthy. The CPI report released Wednesday showed slower price growth than economists expected in May, and May employment data showed healthy job creation in the US economy. Chair Powell is expected to reiterate the Fed’s wait-and-see approach, emphasizing the need for sustained evidence of easing inflation and ensuring policy remains restrictive enough to bring inflation to target without derailing the labor market.
The upcoming meeting will primarily be about the Fed’s revised economic projections and the dot plot, which will be updated for the first time since March. It could offer forward guidance on the number and timing of potential cuts in 2025. In March, the median dot still reflected two cuts for this year, but the last set of projections was released before Trump’s market-moving tariff announcement on April 2. At the time, the FOMC was expecting two rate cuts in 2025. Since then, sticky inflation, the shock of tariff hikes, and other potential changes in policy and regulation from the Trump administration have upended the outlook. Market participants are watching to see whether that median will slip to one or be, affirmed to two, quarter‑point moves.
Overall, this meeting may not offer a decisive signal on timing but will serve as a key checkpoint for the Fed’s evolving reaction function. Markets will be closely analysing the tone of the press conference, changes to the dot plot, and commentary around the inflation trajectory, tariffs, and labor market resilience for clues on the likely pace of easing ahead.
Fed Expected to Hold Rates Steady Again as Markets Eye September Cut : Comments from Century Financial
