Markets remain nervous on Isreal-Iran conflict

THE US Federal Reserve keeps interest rates unchanged.

- CHRIS HARMSE

As was expected, the US Federal Reserve's FOMC during its meeting of June 17-18, 2025 has maintained the federal funds rate at 4.25%-4.50%.

The FOMC, however, has indicated they will lower its bank rate by another two twenty-five-basis-point rate cuts later in 2025, as was released in their report last Wednesday.

The abstaining of lowering rates can also be seen as the upside risk over escalating clashes between Israel and Iran.

This is the fourth meeting in a row that the FOMC kept its short-term rate unchanged.

The nervous and volatile environment due to the President Trump’s s chaotic tariff policies, the Middle East conflicts and other uncertainties in global markets, like the oil price, may led to unfounded signals that any cuts in the next several months could points towards the Fed is worried about a downturn in the economy, rather than lowering rates in line with lower inflation that falls within the Fed's set target.

"We want interest rates to come down because inflation pressures are receding... not because the economy is rolling over and in need of Fed stimulus," said Greg McBride, chief financial analyst at Bankrate.