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What to expect from the June Fed meeting and CPI inflation

Anticipate no change in rates at the June Fed meeting, with interest rates held at 5.25 - 5.5%. Key CPI data, also due, could influence future decisions, especially with inflation still above the Fed's 2% target.
Source: Getty Images
Picture of Frank Kaberna
Frank Kaberna
Director of Strategy, Chicago

Key points

  • The June FOMC meeting is scheduled for 2:00pm EST on June 12, with a press conference following
  • The Fed will almost certainly hold rates at 5.25 - 5.5% at this meeting
  • An updated dot plot will give important clarity into FOMC members' rate expectations
  • CPI inflation data will also release tomorrow, at 8:30am EST

Fed Chair Powell and the FOMC expected to hold rates

The upcoming FOMC meeting is highly anticipated, with expectations set for maintaining the overnight interest rates at the current 5.25 - 5.5%. This decision, seen as almost certain by market analysts, reflects a cautious approach by the Federal Reserve in navigating the current economic landscape and shifts the focus to future meetings and interest rate outlooks.

New Fed dot plot could reveal 2024 cut dates

The FOMC is set to release an updated dot plot during their meeting, providing insights into where members forecast interest rates over the next three years and beyond. Market participants will be keenly watching for any indications of the number of rate cuts expected this year, which could suggest potential timing for these adjustments. The last dot plot from the March meeting revealed expectations of more than 50 bps of cuts by the end of 2024. With only four meetings remaining in the calendar year, revisions will likely pull back to center around one or two 25 bps cuts this year.

A September cut is still 50/50

Current projections from CME futures suggest a roughly 53% chance of a rate cut at the September FOMC meeting. The same projections suggest the most likely scenario by December is just a single 25 basis points cut, indicating a cautious approach towards monetary policy easing within the year. Expectations for cuts just recently lowered drastically after May employment data revealed the US labor market is still surging, adding 272,000 jobs in May.

CPI inflation data could shift the odds

Also set to release tomorrow, CPI inflation data could play a critical role in shaping the committee’s decisions. While the committee will likely focus on the PCE inflation data released at the end of May, officials could still be asked to comment on this data release. With core inflation expected to decrease slightly to 3.5%—still well above the Fed's target of 2%—a significant deviation in this report could either prompt a reassessment of or affirm current monetary policy plans.

What does this mean for the US dollar?

The continual delay of rate cuts in 2024 so far have been positive for the US dollar, which has appreciated significantly against several major currencies. If the Fed continues to decrease the likelihood of imminent rate cuts, USD could strengthen further in the near term. If the Fed takes a dovish stance and indicates rates are coming down sooner or sharper than expected, the dollar could depreciate as a result of falling yield for holding USD.

How to trade US dollar

  1. Open an account to get started, or practice on a demo account
  2. Choose your forex trading platform
  3. Open, monitor, and close positions on USD pairs

Trading forex requires an account with a forex broker like tastyfx. Many traders watch major forex pairs like GBP/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.

You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.

Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.

Reviewed by:
Glen Frybarger
Content Strategist, Chicago

This information has been prepared by tastyfx, a trading name of tastyfx LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. tastyfx accepts no responsibility for any use that may be made of these comments and for any consequences that result. See our Summary Conflicts Policy, available on our website.