June 2025 Monetary Policy Report

The report now describes inflation as 'somewhat elevated' and the labor market as 'solid', while noting a pause in GDP growth. It indicates the FOMC has held rates steady, with a slower balance sheet reduction and lower projected rate path. Financial conditions have eased, with lower Treasury yields and a weaker dollar.

Inflation

• The report now describes inflation as 'somewhat elevated' rather than 'somewhat above' the 2 percent objective, indicating a slight shift in emphasis. Read the section
  Quotes

  Previous report: “Inflation moderated a little further last year after having slowed notably in 2023, but it remains somewhat above the Federal Open Market Committee's (FOMC) objective of 2 percent.”

  This report: “Inflation has continued to moderate this year, though it remains somewhat elevated.”

• The report now projects PCE inflation in 2025 at 1.4 percent, down from 2.1 percent in the previous report. Read the section
  Quotes

  Previous report: “Median: 2024: 2.5; 2025: 2.1; 2026: 2.0; 2027: 1.9; Longer run: 1.8”

  This report: “Median: 2025: 1.4”

Labor market

• The report now characterizes the labor market as 'solid' with moderate job gains, replacing the previous 'stabilized' description. Read the section
  Quotes

  Previous report: “The labor market appears to have stabilized following a period of easing, with the unemployment rate flattening out at a relatively low level over the second half of last year.”

  This report: “The labor market is in solid shape, with a moderate pace of job gains so far this year and the unemployment rate at a low level.”

• The report now projects the unemployment rate in 2025 at 4.5 percent, up from 4.3 percent in the previous report. Read the section
  Quotes

  Previous report: “Median: 2024: 4.2; 2025: 4.3; 2026: 4.3; 2027: 4.3”

  This report: “Uncertainty and risks in projections of the unemployment rate — Median: 2025: 4.5”

Economic activity

• The report now notes that real GDP growth paused in the first quarter, a shift from the previous solid growth, though private domestic final demand grew moderately. Read the section
  Quotes

  Previous report: “Real gross domestic product (GDP) increased solidly last year, supported by strength in consumer spending.”

  This report: “Although growth in real gross domestic product (GDP) is reported to have paused in the first quarter, growth in private domestic final demand was moderate, reflecting a modest increase in consumer spending and a jump in capital spending.”

• The report now projects GDP growth in 2025 at 1.4 percent, down from 2.1 percent in the previous report. Read the section
  Quotes

  Previous report: “Median: 2024: 2.5; 2025: 2.1; 2026: 2.0; 2027: 1.9”

  This report: “Median: 2025: 1.4”

Financial conditions

• The report now says yields on 2-, 5-, and 10-year nominal Treasuries moved moderately lower, whereas the previous report said long-term yields increased markedly and short-term yields declined. Read the section
  Quotes

  Previous report: “While short-term Treasury yields declined somewhat, on net, since last July, yields on long-term nominal Treasury securities increased markedly on balance.”  ·  “After declining from early summer to mid-September to a level just above 3.6 percent, the 10-year Treasury yield rose notably, reaching a level of 4.6 percent by early February (figure 35).”

  This report: “yields on 2-, 5-, and 10-year nominal Treasury securities, on net, moved moderately lower”  ·  “The decline in yields of short- and medium-term Treasury securities reflected a significant decline in real yields, as measured by yields on Treasury Inflation-Protected Securities, that offset an increase in near-term inflation compensation.”

International

• The report now says the broad dollar index decreased on net since early 2025, whereas previously it had increased significantly to a decades-high. Read the section
  Quotes

  Previous report: “the broad dollar index—a measure of the exchange value of the dollar against a trade-weighted basket of foreign currencies—increased significantly, on net, continuing its notable rise seen in the first half of 2024 and reaching its highest level in decades”

  This report: “Since early 2025, the broad dollar index—a measure of the exchange value of the dollar against a trade-weighted basket of foreign currencies—decreased, on net, as changes in U.S. trade policy reportedly led investors to reassess U.S. growth prospects relative to other major economies (figure 46).”

Monetary policy

• The report now states the FOMC has maintained the target range, whereas previously it had lowered the rate by 100 basis points cumulatively. Read the section
  Quotes

  Previous report: “the FOMC lowered the target range for the policy rate by a cumulative 100 basis points over its September, November, and December meetings”

  This report: “the Federal Open Market Committee (FOMC) has maintained the target range for the federal funds rate at 4-1/4 to 4-1/2 percent.”

• The report now describes the expected federal funds rate path beyond 2025 as notably lower, whereas the previous report described the 2026 path as notably higher. Read the section
  Quotes

  Previous report: “On net, the market-implied path for the federal funds rate in 2025 is little changed since last July, and the path for 2026 is notably higher (figure 34).”  ·  “respondents to the January Blue Chip Financial Forecasts survey expected the federal funds rate to average 3.8 percent in the fourth quarter of 2025.”

  This report: “the expected federal funds rate path at the end of this year was little changed. Beyond 2025, the market-implied path for the federal funds rate shifted notably lower.”  ·  “financial market prices imply that the federal funds rate will decline more than 100 basis points from current levels to 3.3 percent by the end of 2026”

These points are generated automatically by comparing the two reports' text, and each quote is checked against the report it's cited from.