Although the Fed kept rates steady for the sixth straight meeting, it maintained projections for two rate cuts in 2025, according to the updated “dot plot” — a chart that reflects individual policymakers’ forecasts. However, the central bank trimmed its rate cut projections for 2026 and 2027, signaling a more gradual easing path.
The update also revealed growing internal divergence. Seven of the 19 Federal Open Market Committee (FOMC) members now expect no rate cuts in 2025, compared to just four in March. Still, the committee unanimously approved the latest policy statement.
Following the announcement, Indian IT stocks came under pressure. LTIMindtree dropped 3.5% to Rs 5,259.5, while Tech Mahindra fell nearly 3% to Rs 1,662.6. OFSS, Persistent Systems, Coforge, Mphasis, and Infosys declined between 1% and 2.6%.
Within the Nifty IT pack, Wipro was the only gainer, trading 0.7% higher, while the Nifty IT index slipped 1.4%.
Alongside the rate decision, the Fed downgraded its growth outlook. GDP growth for 2025 is now forecast at 1.4%, down from 1.7% in March, reflecting signs of economic moderation.On inflation, the Fed raised its core Personal Consumption Expenditure (PCE) projection — its preferred inflation measure — to 3.1% for 2025, up from 2.8% previously. Headline PCE is also expected to reach 3%, indicating lingering price pressures.The unemployment rate is now projected to rise slightly to 4.5%, up from the earlier estimate of 4.4%.
At the post-meeting press conference, Fed Chair Jerome Powell reiterated the central bank’s cautious stance, saying there is still time to assess incoming data before considering rate cuts.
“Uncertainty about the economic outlook has diminished but remains elevated,” the FOMC said in its statement. “The Committee is attentive to the risks to both sides of its dual mandate.”
The Fed described the economy as continuing to grow at a “solid pace,” with unemployment remaining low, though inflation is “somewhat elevated.”
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