RATE REFLECTION

The Fed left interest rates unchanged at today’s meeting, but there were tariff-related adjustments. Forecasted 2025 GDP growth slid from 2.1% to 1.7%, and 2026 growth from 2% to 1.8%. Expected 2025 core inflation rose from 2.5% to 2.8%, but hinting that tariff inflation is likely transitory, inflation forecasts for 2026 and 2027 remained unchanged at 2.2% and 2.0%, respectively. Two 25bps cuts in 25H2 are plausible. Substantial uncertainty lurks.