The Fed is set to make its next rate decision today. Here’s what to expect.

The Federal Reserve Bank is poised to maintain its current benchmark rate at its upcoming meeting, continuing the cautious approach it has upheld in the first half of 2025. The CME Group’s FedWatch Tool indicates a 99.9% likelihood that the Fed will keep the federal funds rate within the range of 4.25% to 4.5%, a range that has been unchanged since December.

The Fed’s reluctance to adjust rates can be attributed to the uncertainty surrounding President Trump’s tariffs. Despite the President’s calls for rate cuts, the Fed remains vigilant in monitoring the economic impact of these policies. Recent data shows slight improvements in consumer sentiment, but concerns persist due to the ongoing trade disputes. Inflation rates have seen a minor uptick, reaching 2.4% in May, while job growth has slowed but remains resilient.

EY-Parthenon Chief Economist Gregory Daco notes that the Fed’s wait-and-see approach reflects a cautious stance amid economic uncertainties. Despite signs of a robust labor market, the Fed remains vigilant in assessing the economic outlook.

The upcoming Fed meeting, scheduled for June 17-18, will feature the Federal Open Market Committee’s decision announcement on the second day. Fed Chair Jerome Powell will address the committee’s decision in a press conference following the announcement. Analysts will closely scrutinize the possibility of a unanimous decision or any dissent among voting members, as divergent opinions could signal a shift in policy direction.

While there is speculation about a potential rate cut, experts predict a high probability of the Fed maintaining the current rate range. Greg McBride, chief financial analyst at Bankrate, emphasizes the lack of compelling reasons for a rate cut given the current economic conditions. The last rate reduction occurred in December 2024, highlighting the Fed’s cautious approach to policy adjustments.

For consumers, the Fed’s decision to hold rates steady may impact borrowing costs but benefit savers with higher interest rates. Shopping for high-yield savings accounts or locking in CD rates could yield favorable returns. McBride suggests paying down high-cost debt and bolstering emergency savings in light of steady borrowing rates. While a rate cut may not directly impact mortgage rates, it could signal positive trends for prospective homebuyers.

In conclusion, the Fed’s decision at the upcoming meeting will have implications for borrowers and savers alike. With a focus on economic uncertainties and cautious policy adjustments, consumers should stay informed about potential rate changes and make informed financial decisions based on prevailing market conditions.