Fed Set to Keep Interest Rates Unchanged in June 2025 as Job Market Weakens
As the U.S. economy shows early signs of a slowdown, the Federal Reserve is expected to keep interest rates unchanged in its upcoming policy meeting. Despite political pressure from President Donald Trump, who continues to call for lower rates, the central bank remains committed to curbing inflation rather than boosting short-term growth.
Fed Holds Rates Steady: Inflation Still a Priority
The Federal Reserve’s primary concern continues to be inflation, even as consumer spending weakens and unemployment claims rise. Analysts say a rate cut is unlikely in June, with Wall Street putting a near-zero probability on any immediate monetary easing. Forecasts also suggest rates will remain steady through at least July 2025.
President Trump insists that inflation is under control and that the Fed should lower rates to stimulate growth. However, many economists disagree, pointing to recent data showing mixed inflation trends due to fluctuating tariffs and international supply chain issues.
Jobless Claims Signal Labor Market Weakness
One of the more troubling economic indicators is the steady rise in continuing jobless claims, which now approach 2 million — the highest level since November 2021. While not alarming in isolation, this trend suggests a slowing labor market that could impact broader consumer demand and economic growth.
“The labor market looks fine on the surface, but the trajectory is concerning,” says Preston Mui, senior economist at Employ America.
He added that both labor force participation and overall employment rates are on the decline — a troubling sign if the Fed continues with its current interest rate stance.
Tariffs and Consumer Prices: Mixed Signals
The impact of President Trump’s tariffs on inflation remains uncertain. While some categories like autos and electronics are seeing modest price increases, consumer demand is weakening across sectors such as travel, hospitality, and recreation. According to a report from Citi, this could reduce the risk of a prolonged inflationary spiral.
“Soft demand suggests a lower likelihood that any price increases from tariffs will lead to persistent inflation,” Citi analysts noted.
Economic Outlook for 2025: Slower Growth Ahead
With slowing job growth, stagnant retail spending, and rising geopolitical tensions, most experts agree the second half of 2025 could be economically turbulent. Mark Zandi, Chief Economist at Moody’s Analytics, warns of a “very uncomfortable” economic period.
“I don’t see the economy kicking back up for a long time,” said Zandi. “We’re looking at rising inflation alongside slowing growth — a tough combo for policymakers.”
Federal Reserve interest rate decision June 2025: No rate cut expected
Unemployment claims 2025 update: Highest since 2021
Trump vs. Fed policy: Political tension over inflation outlook
Inflation trends and tariffs: Mixed signals for U.S. businesses
2025 U.S. economic forecast: Slower growth, soft consumer demand
Conclusion: Will the Fed Change Course in 2025?
Despite calls from the White House for monetary easing, the Federal Reserve is maintaining its hawkish stance, prioritizing long-term inflation control over short-term economic growth. With the labor market softening and consumer activity declining, pressure will mount on the Fed to eventually act — but for now, interest rates are expected to stay high into late 2025.
Stay tuned for updates on the Federal Reserve’s next interest rate decision, inflation data, and economic projections as the U.S. navigates a potentially volatile financial year.