EY: The dot plot is expected to still indicate two 25 basis point rate cuts by the end of the year.

BlockBeats News, June 19, EY economist Gregory Daco stated that the Federal Reserve is expected to keep the benchmark interest rate unchanged at 4.25%-4.50%. Recent comments from the Fed have reinforced a cautious "wait-and-see" attitude, with officials showing no urgency to adjust policies amid heightened economic uncertainties. The policy statement is unlikely to undergo major changes. The FOMC may reiterate that inflation remains "slightly elevated," labor market conditions are "solid," and the unemployment rate is "stable at a low level." It might also restate that "the risks of higher unemployment and rising inflation have increased," particularly considering the uncertainties surrounding the economic outlook. The median rate forecast in the dot plot is expected to remain unchanged, with two rate cuts of 25 basis points each predicted by the end of the year. The dot plot is also expected to show a further 50 basis points cut to 3.4% in 2026, followed by another cut to 3.1% in 2027. Policymakers’ median estimate for the long-term neutral rate is likely to stay unchanged at 3%. (Jin10)