Research
June 18, 2025
Monetary Policy
Federal Reserve Maintains Wait-and-See Approach, Rate Cuts Possible Later in 2025
As expected, the Federal Open Market Committee (FOMC) left short-term interest rates unchanged at its June 17–18 meeting—the fourth consecutive meeting with no policy shift. The decision reflects ongoing economic strength, including solid growth and low unemployment, even as inflation pressures persist.
In its statement, the Fed noted that “uncertainty about the economic outlook has diminished but remains elevated,” reaffirming its dual mandate of maximum employment and 2% inflation. Policymakers signaled a continued cautious stance, emphasizing that future actions will depend on incoming data and greater policy clarity.
The Fed’s median projections still point to two rate cuts in 2025, but divisions remain, and near-term reductions are unlikely. The next potential window for a policy move appears to be the September 16–17 meeting, with the July 29–30 meeting expected to result in another hold on rates.
Fed officials now forecast 1.4% GDP growth in 2025—down from March’s 1.7% projection—and 1.6% in 2026. The unemployment rate is expected to rise to 4.5% this year, with core PCE inflation climbing to 3.1% in 2025 before easing to 2.4% the following year.
For the restaurant industry, high interest rates continue to influence borrowing costs, delaying expansion plans and capital projects. However, the prospect of rate cuts later this year could ease credit burdens, support consumer spending, and strengthen demand in sectors reliant on discretionary income—like foodservice and hospitality.
In its statement, the Fed noted that “uncertainty about the economic outlook has diminished but remains elevated,” reaffirming its dual mandate of maximum employment and 2% inflation. Policymakers signaled a continued cautious stance, emphasizing that future actions will depend on incoming data and greater policy clarity.
The Fed’s median projections still point to two rate cuts in 2025, but divisions remain, and near-term reductions are unlikely. The next potential window for a policy move appears to be the September 16–17 meeting, with the July 29–30 meeting expected to result in another hold on rates.
Fed officials now forecast 1.4% GDP growth in 2025—down from March’s 1.7% projection—and 1.6% in 2026. The unemployment rate is expected to rise to 4.5% this year, with core PCE inflation climbing to 3.1% in 2025 before easing to 2.4% the following year.
For the restaurant industry, high interest rates continue to influence borrowing costs, delaying expansion plans and capital projects. However, the prospect of rate cuts later this year could ease credit burdens, support consumer spending, and strengthen demand in sectors reliant on discretionary income—like foodservice and hospitality.