US News
LAST UPDATE: June 19, 2025
Fed keeps rates steady but pencils in two cuts for 2025; Powell sees ‘meaningful’ inflation ahead
On June 18, the Federal Reserve held its benchmark rate at 4.25–4.50%, signaling two potential quarter-point cuts later this year. Chair Powell warned of “meaningful” inflation driven by upcoming U.S. tariff pass-through and emphasized a data‑dependent approach amid weaker growth and lingering uncertainties.
Insight
The Fed balances inflation risks from tariffs and geopolitical uncertainty against slowing growth—signaling caution. Treasury projections point to a quieter second half, but Powell’s tone suggests policymakers remain wary of inflation shocks disrupting their cautiously optimistic roadmap.
Powell Says Pace of Job Creation Is a Concern
Fed Chair Jerome Powell, speaking on June 18, acknowledged that while layoffs remain low, the rate of new job creation has slowed significantly. He noted that individuals who are currently unemployed are finding it increasingly difficult to secure employment, signaling a potential shift in labour-market dynamics (wsj.com).
Insight
Powell’s comments signal a strategic pivot: even amid solid headline unemployment and wage growth, the low pace of hiring raises caution. Slower job creation may prompt the Federal Reserve to proceed with policy easing more deliberately, ensuring they don’t prematurely withdraw support amid early signs of labor market softening.
US consumers more pessimistic on tariff costs, TransUnion says
A TransUnion survey found rising consumer anxiety about tariffs: 62% believe import taxes will increase living costs, up from 55% in April. Concerns are strongest in durable goods such as electronics and appliances.
Insight
Sentiment data reveals growing public awareness of tariff-linked inflation—an emerging headwind to spending. If consumers delay purchases, it could weigh on growth, reinforcing the Fed’s caution.
US single-family housing starts rise in May; permits slump
U.S. single-family home starts increased 1.7% in May, signaling some resilience, but permits fell 4.5%, suggesting future construction headwinds. Rising mortgage rates continue to restrain longer‑term building activity.
Insight
Builders are completing underway projects, but caution dominates new investment amid tight mortgage conditions. The divergence between starts and permits points to a potential slowdown in residential construction ahead.
US Plans to Ease Capital Rule Limiting Banks’ Treasury Trades
U.S. bank regulators—the Fed, FDIC, and OCC—are planning to lower the supplementary leverage ratio (SLR) by up to 1.5 percentage points for major banks. Instead of excluding Treasuries from capital calculations, the relief would come via reduced ratios (to about 3.5%–4.5% from 5%), aiming to boost activity in the $29 trillion Treasury market (forexlive.com, news.bloomberglaw.com, reuters.com).
Insight
The modest cut may ease pressure on banks’ Treasury trading, but without a full Treasuries carve-out, the impact could be limited. It reflects a deregulatory push that risks marginally bolstering liquidity while drawing criticism for loosening post-crisis safeguards.
