An Yong: The rate grid still shows that there will be two 25 basis point rate cuts by the end of the year.

Gregory Daco, an economist at EY, stated that he expects the Federal Reserve to keep the benchmark interest rate unchanged at 4.25%-4.50%. The recent comments from the Fed have reinforced a stance of caution, with officials showing no urgency to adjust policy amid increased uncertainty in the economic outlook. The policy statement is unlikely to see major changes. The FOMC may reiterate that inflation remains "a bit high," the labor market conditions are "stable," and the unemployment rate is "steady at a low level." It may also emphasize that the risks of rising unemployment and inflation have increased, especially given the uncertainty in the economic outlook. The median dot plot of rate expectations is expected to remain unchanged, with two 25 basis point rate cuts by the end of the year. The dot plot is expected to show further rate cuts of 50 basis points to 3.4% in 2026 and to 3.1% in 2027. Policymakers' median estimate of the long-term neutral interest rate is likely to remain unchanged at 3%.