The US Federal Reserve wrapped up its fourth meeting of 2025 on Wednesday, June 18, opting to keep its key interest rate unchanged in the range of 4.25% to 4.5%. The decision came amid ongoing trade tensions, particularly in light of tariffs imposed by the Trump administration, and was largely in line with analyst expectations.
In his post-meeting comments, Federal Reserve Chair Jerome Powell highlighted the resilience of the US economy, reaffirming that the central bank’s dual mandate — achieving maximum employment and stable prices — remains balanced. Powell noted that the labor market is not contributing to inflationary pressures, signaling that the Fed feels confident in its current policy stance.
“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell remarked. This stance reflects the Fed’s cautious approach, as it seeks to assess the longer-term effects of both domestic and international economic factors, including the impact of tariffs and global trade uncertainties.
Powell also acknowledged that gross domestic product (GDP) growth had slowed in the first quarter of 2025, attributing the slowdown to higher import spending as businesses moved quickly to make purchases ahead of the Trump administration’s import tariffs. He noted that the full impact of the tariffs had not yet been fully realized in the economy, with many retailers still working through inventories purchased before the tariffs were imposed.
“Whether these price increases will be a one-time shock or a more persistent driver of inflation remains to be seen,” Powell said, pointing to the uncertainty surrounding how much the tariffs will affect inflation in the long term.
The Fed’s decision to maintain interest rates comes as it closely monitors inflation, labor market conditions, and the broader economic outlook. Although inflation is still above the central bank’s target range, Powell’s comments suggest that the Fed is in a wait-and-see mode, looking for signs of stabilization before making further moves.
Before the Fed’s announcement, President Donald Trump voiced his dissatisfaction with Powell, reiterating his belief that the Fed should be moving more aggressively to cut rates in order to stimulate the economy. Trump even joked about the possibility of appointing himself to replace Powell as Fed chair, a statement that echoes his previous criticisms of Powell’s leadership. Trump appointed Powell as Fed chair in 2017, and Powell’s term is set to run until May 2026.
In the wake of the Fed’s decision, markets saw limited movement. Gold prices remained largely unchanged, dipping just 0.29% to settle at US$3,379.48 per ounce by the end of the day. Despite the Fed’s cautious stance, gold investors did not see significant shifts in market sentiment. Similarly, silver prices experienced a decline earlier in the day, falling by 1.03%, although it managed to stay close to recent highs, trading at US$36.72 per ounce as of 3:00 p.m. EST.
The relative stability in gold and silver prices reflects a market that is in a holding pattern, awaiting more clarity on economic and geopolitical developments. As global trade tensions continue to simmer and the effects of tariffs remain uncertain, precious metals like gold remain an attractive safe-haven asset for investors.
In the broader equities market, stocks also saw little movement following the Fed’s decision, with investors taking a cautious approach as they digest Powell’s comments and await further signals about the economic outlook. The Fed’s careful stance suggests that while the US economy is on solid footing for now, it is still vulnerable to external shocks and domestic challenges, such as trade disruptions and inflationary pressures.
Looking ahead, the Federal Reserve will continue to monitor economic data closely, especially as it relates to inflation trends and the evolving impacts of trade policies. For now, Powell’s emphasis on patience and caution indicates that the central bank is unlikely to make major policy changes in the near term, unless new economic conditions warrant an adjustment.
As the markets await the next steps, both investors and policymakers will be closely watching how global trade developments unfold, particularly with respect to tariffs, and whether they lead to more persistent inflationary pressures or merely represent short-term disruptions.
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