Upcoming Events
Monday, June 23
Waller Speaks at International Journal of Central Banking Conference
Bowman Speaks at International Journal of Central Banking Conference
Kugler Speaks at Fed Listens Event
Goolsbee Speaks at Milwaukee Business Journal Event
Tuesday, June 24
Money Stock Measures Release
Powell Testifies before U.S. House Financial Services Committee
Bar Speaks at Fed Listens Event
Collins Speaks at Boston Fed Event
Williams Speaks at Center for Economic Growth and NY CREATES Event
Hammack Speaks at Barclays-CEPR Monetary Policy Forum
Wednesday, June 25
Powell Testifies before U.S. Senate Committee on Banking, Housing, and Urban Affairs
Thursday, June 26
Gross Domestic Product Release
Bar Speaks at Cleveland Fed Policy Summit
Hammack Speaks at Cleveland Fed Policy Summit
Friday, June 27
Personal Consumption Expenditures Price Index Release
Surveys of Consumers Update
GDPNow Update
Cook Speaks at Fed Listens Event
Williams Speaks at Bank for International Settlements Conference
Hammack Speaks at Fed Listens Event
Recent News
Holding tight… The Federal Open Market Committee voted to hold its federal funds rate target range at 4.25 to 4.5 percent at last week’s meeting. The target range has remained unchanged since December 2024.
At the post-meeting press conference, Federal Reserve Chair Jerome Powell said FOMC members “believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments.” They seem especially concerned about the fallout from President Trump’s trade war. As Powell explained:
The effects of tariffs will depend, among other things, on their ultimate level. Expectations of that level, and thus of the related economic effects, reached a peak in April and have since declined. Even so, increases in tariffs this year are likely to push up prices and weigh on economic activity. The effects on inflation could be short-lived, reflecting a one-time shift in the price level. It's also possible that the inflationary effects could instead be more persistent. Avoiding that outcome will depend on the size of the tariff effects, on how long it takes for them to pass through fully into prices, and ultimately on keeping longer term inflation expectations well anchored. Our obligation is to keep longer term inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem.
Powell noted that tariffs could put the FOMC in a “challenging scenario” where the price stability and employment components of the dual mandate are in conflict. “If that were to occur,” Powell said, “we would consider how far the economy is from each goal and the potentially different time horizons over which those respective gaps would be anticipated to close.” For now, he said the FOMC is “well positioned to wait—to learn more about the likely course of the economy before considering any adjustments to our policy stance.”
Looking ahead… The FOMC also released revised projections for real Gross Domestic Product growth, the unemployment rate, inflation, and the federal funds rate.
The median FOMC member now projects just 1.4 percent real GDP growth in 2025, down from 1.7 percent in March. Correspondingly, the median member expects the unemployment rate will rise to 4.5 percent, up from the prior projection of 4.4 percent.
On the inflation front, the median member now projects the Personal Consumption Expenditures Price Index (PCEPI) will grow 3.0 percent this year, up from 2.7 percent in March. The median member thinks core PCEPI, which excludes food and energy prices, will grow 3.1 percent. The median member had previously projected 2.8 percent core inflation.
Most FOMC members are still penciling in at least two 25 basis point cuts to the federal funds rate target this year. The median projection for the midpoint of the target range following the December 2025 meeting was unchanged at 3.9 percent. However, seven members now believe no cuts will be warranted this year, up from just four members back in March.
Taken together, the latest projections also provide some sense of how the FOMC thinks about President Trump’s tariffs. While the median projection for real GDP growth fell and the median projection for inflation rose, the sum of these median projections—that is, the implied nominal spending growth projection—was unchanged at 4.4 percent. In other words, the median FOMC member seems to believe aggregate demand will remain on its current trajectory. That suggests they think the tariffs are primarily (and perhaps exclusively) a supply-side problem.
Production… Industrial production declined 0.2 percent in May 2025, new data from the Fed show. Industrial production was 2.2 percentage points higher than it was in January 2020, just prior to the pandemic. It was 0.6 percentage points higher than its year-earlier level.
Capacity utilization was 77.4 percent in May, down from 77.7 percent in the prior month. It is 0.1 percentage points below its year-earlier level and 2.2 percentage points below its long-run average.
More broadly, production appears to be rebounding. The Atlanta Fed’s GDPNow model currently estimates real Gross Domestic Product (GDP) will grow at an annualized rate of 3.4 percent in 2025:Q2, after declining at an annualized rate of 0.2 percent in 2025:Q1. If the current GDPNow estimate were realized, it would amount to roughly 1.6 percent real GDP growth in 2025:H1.