The latest Fed monetary policy meeting was held on June 19, 2025, and the meeting decided to keep the benchmark interest rate unchanged in the range of 4.25%-4.50%, which is in line with market expectations. According to the newly released dot plot, the Fed still plans to implement two rate cuts in 2025 and one in 2026, reducing the expectation of one rate cut in 2026 from the March forecast.

The Federal Reserve emphasized in its statement that the current monetary policy remains in a "moderately restrictive" state, and a reduction in the interest rate cycle will only begin when more evidence of sustained declining inflation is observed. Nevertheless, the possibility of a rate cut in September has increased, alleviating market concerns about the Federal Reserve potentially adopting a more aggressive policy stance.

In terms of balance sheet management, the Federal Reserve announced that starting in April, it will significantly reduce the scale of Treasury bond reductions from $25 billion per month to $5 billion, while maintaining the pace of mortgage-backed securities (MBS) reductions unchanged, indicating that it is gradually slowing the pace of balance sheet contraction.

The Chairman of the Federal Reserve specifically mentioned in his post-meeting remarks the potential impact of geopolitical conflicts and tariff policies on prices, stating that tariff measures may push inflation data higher in the coming months. However, he also noted that the U.S. economy is showing good resilience, and short-term factors such as oil price fluctuations have a limited impact on long-term inflation trends.

It is worth noting that the Federal Reserve will not cut interest rates in June or July. Decision-makers need to obtain more conclusive evidence of sustained inflation decline before starting a rate-cutting cycle. This monetary policy stance demonstrates the Federal Reserve's cautious approach in seeking a balance between inflation and economic growth.