What's Next After The Fed Kept Rates at 4.25%-4.50%
Last week, the Federal Reserve reiterated no change to its interest rate policy. It kept rates a 4.25% to 4.50%, a move that stock markets widely anticipated. What will happen next for U.S. inflation, jobs, the tariff trade war, and stock markets?
Fed Chair Powell said that inflation is contained, but is somewhat elevated. The job market is healthy. However, the FOMC wants to have the luxury of monitoring the impact of tariffs throughout the summer. It thought that tariffs would raise prices shortly after its introduction to markets. This did not happen yet.
The 20+ Year Treasury Bond ETF (TLT) traded in a narrow range of around $86 throughout June. It fell by around 0.8% in the last week in reaction to the Fed decision.
Stock markets shifted out of technology hardware and software stocks. Alphabet (GOOG), Meta (META), and Nvidia (NVDA) fell last week. Buyers picked up Micron (MU), AMD (AMD), and Dell (DELL) instead.
Bank stocks like JP Morgan (JPM) and Wells Fargo (WFC) rose. Visa (V) and Mastercard (MA) fell by 8.84% and 9.56%, respectively. The government continued to legitimize stablecoins. That might force credit card firms to cut fees or lose out on transaction volumes.
Fortunately, stablecoins give free markets another way to facilitate trades. That helps encourage volumes when the Fed Fund Rates are not falling.
