
No cuts today, but the Fed’s job is about to get much, much harder
Today, the Federal Reserve opted to maintain its policy rate at a target range of 4.25% to 4.5%, where it has lingered since December 2024. This move was widely anticipated by markets, which currently price three additional rate cuts by year-end. Should these cuts materialize, the target rate will settle near 3.5% by December, within vaguely restrictive territory, given neutral policy rate estimates (r*) of 3% to 3.5%.