Key Highlights:
- The Federal Reserve has decided to keep the benchmark interest rate steady between 4.25% and 4.5%, showing no immediate plans for cuts.
- Chairman Jerome Powell pointed out the rising economic uncertainty and warned of potential increases in unemployment and inflation risks.
- ING posits that the Fed’s cautious stance could postpone rate cuts, but when they occur, they might be more substantial.
The Federal Reserve may not lower interest rates in the near future, but if they do, the cuts could be vigorous, according to Dutch investment bank ING.
On Wednesday, during a press conference after maintaining the benchmark rate, Jerome Powell indicated concerns about stagflation and the overall economic outlook. He stated that uncertainty is growing, along with the risks of higher unemployment and inflation.
ING warns that the Fed’s wait-and-see posture might persist through to September, suggesting that upcoming meetings could follow a similar cautious approach. Their analysis indicates the Fed is likely hesitant to act due to trade tensions and supply chain interruptions that may exacerbate inflation.
In market reactions, Bitcoin has surged from $96,000 to $99,500 following the Fed’s announcement, bolstered by anticipatory comments from President Donald Trump about potential trade deals.
