Stagflation, Rate Cut Fears, Policy Jitters

● Stagflation Looms, Rate Cuts Dwindle

Comprehensive Analysis of US FMC Meeting Results and Future Interest Rate and Economic Outlook

Starting with the news that the US Federal Reserve FMC meeting has frozen the benchmark interest rate at 4.5%. All key content is included, from the interest rate freeze, changes in the dot plot, inflation indicators and employment forecasts announced so far, to the uncertainties of the tariff war and the Middle East war, and adjustments to the monetary policy framework. The best SEO keywords related to economic outlook, monetary policy, interest rates, inflation, and tariff war are naturally incorporated, so read to the end.

[1] Analysis of Interest Rate Policy and Dot Plot

The current benchmark interest rate has been maintained for six months since June and is frozen at 4.5%.
Looking at the dot plot of FMC members, the median value remains at 3.9%, but the average value has increased.
Hawkish and dovish opinions have separated, and more people prefer freezing interest rates rather than cutting them.

[2] Changes in Inflation, Employment, and Economic Outlook

The inflation forecast has been revised upward from the previous 2.7% to 3.0%, and from 2.2% to 2.4% next year.
The economic growth forecast has also been revised downward from 1.7% to 1.4% this year, and from 1.8% to 1.6% next year.
In the labor market, the unemployment rate implies the possibility of a slight increase, reflecting employment uncertainty.
All of this data takes into account the uncertainties related to inflation, and is interpreted as an economic situation closer to stagflation overall.

[3] Tariff War and Middle East War Uncertainty

The tariff war is expected to shift from initial escalation to potential easing.
The tariff burden is expected to gradually shift from importers to exporters, manufacturers, and consumers.
The Middle East war is also expected to act as a short-term factor in soaring energy prices, but is not expected to spread to long-term inflationary pressures.

[4] Key Messages from Chairman Powell’s Press Conference

Chairman Powell mentioned the adjustment of the monetary policy framework and is reorganizing the policy decision structure.
He emphasized the will to continue restrictive tightening monetary policy so that price increases do not lead to inflation.
He also affirmed that even if a new Federal Reserve Chairman comes in, the independence and existing principles of monetary policy will not change.

[5] Future Interest Rate Cut Outlook and Schedule

The current interest rate cut journey is expected to proceed gradually.
There will be no change in July for the time being, there is a possibility of policy structure changes at the Jackson Hole meeting in August, and
There are expectations for interest rate cuts in September and December.
However, a cautious approach is needed due to many upside risks due to external uncertainties such as tariff wars and Middle East wars.

[6] Data and Outlook for the Economy as a Whole

The IMF and other institutions forecast the US economic growth rate for 2025 to be 1.7% to 1.8%.
Inflation and employment data are stable, but inflationary pressures still exist.
Overall, the US economy is robust, but uncertainties are increasing, making it sensitive to changes in monetary policy.

< Summary >
As a result of the US Federal Reserve FMC meeting, the benchmark interest rate was frozen at 4.5%, hawkish opinions increased in the dot plot, and expectations for interest rate cuts were seen moderately. The inflation forecast was revised upward, slightly increasing inflationary pressure, and the economic growth rate was revised downward. External uncertainties such as tariff wars and Middle East wars require caution in the interest rate cut schedule, and Chairman Powell emphasizes the adjustment and maintenance of independence of the monetary policy framework. Overall, economic outlook, monetary policy, interest rates, inflation, and tariff war-related uncertainties are high, but efforts to stabilize prices through gradual interest rate cuts are expected to continue.

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● FOMC Watch- June Jitters

Latest Global Economic Outlook Analysis

1. Powell Interview and Financial Policy Uncertainty

Focuses on the uncertainties in financial policy, such as whether to lower interest rates and the concerns within the Federal Reserve, based on what key economic figures directly stated in Powell’s interview and Trump’s remarks.
It shows the wavering sentiments of Wall Street experts, including the lack of confidence in the interest rate path and the expectation of two rate cuts.
Geopolitical and inflation-related discussions are expected to significantly impact the overall financial market.

2. Fluctuations in Oil Prices, Inflation, and Geopolitical Risks

Warns of the repercussions of inflation and the resulting stagflation pressure on the financial market due to extreme fluctuations in global oil prices, ranging from $75 to $100, or even down to $50.
Geopolitical risks, particularly the Middle East issue and the Iran situation, are critical factors influencing oil prices and inflation prospects.
Economic outlook experts analyze that these factors will also greatly affect interest rate policies and bond price movements.

3. Trends in Gold, Stocks, and Commodity Markets

Gold prices may be adjusted from the $3,300-$3,400 level depending on the position changes of both retail and central banks.
Stocks, including those in the U.S., are being viewed cautiously by retail and institutional investors worldwide regarding valuations.
They are expected to gradually rise or fall depending on market trends.
Commodities are emerging as a core part of portfolio diversification strategies due to the attractiveness of real assets amid inflation.

4. Foreign Exchange and Treasury Bonds, Long-Term Interest Rate Outlook

The Korean won has shown a recent decline, with stabilization prospects centering around the ₩135 level.
U.S. Treasury bonds (especially the 30-year bonds) face upward pressure on long-term interest rates due to inflation, oil price fluctuations, and government fiscal policies.
Complex aspects of the international financial market, such as a weaker dollar and stronger Treasury bonds, are expected to unfold in conjunction with the policies of central banks in Japan and Europe.
Investors should focus on risk management, paying attention to policy tensions and earnings release schedules in the U.S., Europe, and Asia.

5. Policy Changes and Future Outlook

This discussion mentions the various signals issued by Powell, Trump, and major institutions.
Next year, the focus will be on the Federal Reserve’s policy changes, the emergence of a new chair, and long-term growth and inflation prospects.
Corporate earnings releases, fiscal policies of each government, and foreign exchange market trends are predicted to be key variables that will determine the direction of the overall economy in the future.
In particular, various issues that align with SEO key words such as “economic outlook,” “Wall Street,” “commodities,” “inflation,” and “geopolitics” are all mentioned.

Summary

Financial policy uncertainty is highlighted following the Powell interview.
Fluctuations in oil prices and geopolitical risks are expected to significantly impact inflation and interest rate policies.
The gold, stock, and commodity markets are expected to move dynamically due to trading between retail investors and institutions.
Foreign exchange rates, including the Korean won, and U.S. Treasury bonds are expected to experience significant mid- to long-term volatility in conjunction with policy changes in each country.
The Federal Reserve’s policy shift and corporate earnings announcements next year are predicted to be important variables that will influence the global economic outlook.

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