The Fed announced on Wednesday that it decided to keep interest rates unchanged for the fourth consecutive meeting.

The Fed expects economic growth to slow and unemployment to rise slightly, as stated in their latest quarterly forecast released on Wednesday.

However, Fed policymakers said that although they predict that US President Trump's tariffs will lead to higher inflation, they still expect to cut interest rates twice this year.

Four consecutive times of holding ground

On June 18, the Federal Reserve announced that it would maintain the target range of the federal funds rate between 4.25% and 4.50%, which was in line with market expectations. This is also the fourth time since January that the Fed has decided to keep interest rates unchanged.

The Federal Reserve expects that compared with the forecast in March, US economic growth will slow significantly, inflation will rise, and the unemployment rate will rise slightly by the end of 2025.

The SEP shows that the Fed expects core inflation to reach 3.1% this year, higher than the 2.8% forecast in March; it will fall to 2.4% by 2026 and further to 2.1% in 2027.

The Fed expects the unemployment rate to rise to 4.5% in 2025, higher than the previous forecast of 4.4%. As of May this year, the US unemployment rate was 4.2%. The unemployment rate is expected to remain at 4.5% until 2026 and fall slightly to 4.4% in 2027.

The Fed has lowered its forecast for US GDP growth: it expects an annualized growth rate of 1.4% this year, 1.6% in 2026, and 1.8% in 2027.

In the March forecast, officials expected GDP growth of 1.7% in 2025 and 1.8% in 2026 and 2027.

Continue to expect two rate cuts this year

The latest interest rate forecast, the "dot plot", shows that the number of officials who do not expect a rate cut this year has increased from 4 in March to 7, showing a more cautious tendency.

Of the 19 Fed officials, 8 support two rate cuts this year, 7 believe that there should be no rate cuts this year, 2 support one rate cut, and 2 advocate three rate cuts. It is expected that the rate will be cut by 25 basis points in 2026 and 2027.

According to CME's "Fed Watch": The probability of the Fed keeping interest rates unchanged in July is 90.7%, the probability of a cumulative rate cut of 25 basis points is 9.3%, and the probability of a cumulative rate cut of 50 basis points is 0%. The probability of the Fed keeping interest rates unchanged in September is 36.6%, the probability of a cumulative rate cut of 25 basis points is 57.9%, and the probability of a cumulative rate cut of 50 basis points is 5.6%.

Powell: Economic outlook remains uncertain

Fed Chairman Powell warned on the same day not to over-trust the Fed's interest rate forecasts, as forecasts may change based on published data, especially inflation data.

Powell said that the macroeconomic environment risks remain high and the interpretation of the dot plot should be cautious. There is still a lot of uncertainty in the economic outlook, and the Fed is willing to "stand still" to wait for more information.

"No one is completely sure about the interest rate path, it depends on the data... Before making any adjustments to policy, we are fully capable of waiting for more data that may reflect the direction of the economy." Powell said.

Powell also said, "All external forecasters and the Fed are saying that we expect significant inflation in the coming months, and we must take this into account."

Previously, US President Trump has repeatedly called on the Fed to cut interest rates. In the latest call, Trump said that the Fed should cut interest rates by 250 basis points.