EY: The dot plot is expected to indicate two rate cuts of 25 basis points by the end of the year.

On June 19, Ernst & Young economist Gregory Daco said that the Federal Reserve is expected to keep the benchmark interest rate unchanged at 4.25%-4.50%. The Fed's recent comments have reinforced a wait-and-see approach, with officials not showing urgency to adjust policy amid increased uncertainty about the economic outlook. The policy statement probably won't change much. The FOMC is likely to reiterate that inflation remains "a bit high", labor market conditions are "solid" and the unemployment rate is "stable at a low level". It is likely to reiterate that "the risk of higher unemployment and rising inflation has increased", especially given the uncertainty of the economic outlook. The dot plot for median interest rate expectations is expected to remain unchanged, with two 25bp rate cuts by the end of the year. The dot plot is still expected to show a further 50bp cut to 3.4% in 2026 and another cut to 3.1% in 2027. Policymakers' median estimate of the long-term neutral rate is likely to remain unchanged at 3%.