In the upcoming FOMC meeting on June 13-14, it is expected that the Fed will maintain the policy interest rate at 5.00-5.25% with a non-unanimous decision. This is to observe the economic and inflation trends in the near future after the rapid interest rate hikes in the past. Although U.S. inflation remains high and labor market figures are still relatively strong, the trend of U.S. inflation is continuously weakening, while the labor market is showing signs of slowing down amid increasing economic risks from issues in the U.S. banking sector leading to credit tightening. Additionally, the impacts from the rapid interest rate hikes in the past are expected to become more evident on the real economy in the near future, as the effects of monetary policy typically have a lag time. This will likely result in the Fed deciding to keep the policy interest rate at 5.00-5.25% in the upcoming FOMC meeting to await feedback from economic data, inflation, and the financial sector moving forward.

However, it is anticipated that the Fed's decision in this meeting may not be unanimous, as some committee members may still support further interest rate hikes amid high inflation figures and a strong labor market. According to the latest data, the general inflation rate for May 2023 slightly decreased to 4.9% YoY from the previous month's 5.0% YoY, but it remains significantly above the Fed's target of 2%. Furthermore, the core personal consumption expenditures (Core PCE) index, which the Fed closely monitors, continues to rise at 4.7% YoY, up from 4.6% YoY in the previous month, indicating that U.S. inflation remains sticky and is unlikely to decrease quickly. Meanwhile, although the unemployment rate in May increased to 3.7%, the highest in seven months, up from 3.4% in the previous month, non-farm payroll figures exceeded expectations, rising to 339,000 in May, reflecting a still relatively strong labor market.

In the upcoming FOMC meeting, economic forecasts and the Fed's outlook on future interest rate adjustments will be released, reflecting the Fed's view on the direction of monetary policy moving forward. However, if future economic and inflation trends differ from the assessments, the Fed remains flexible to adjust monetary policy accordingly. The Kasikorn Research Center believes that while the Fed may decide to maintain the policy interest rate in the FOMC meeting on June 13-14, it does not rule out the possibility of raising interest rates in the next meeting if necessary. It is expected that the Fed will continue to signal that the direction of monetary policy in the near future will depend significantly on economic and inflation data. If inflation surges again amid risks from volatile global oil prices, there is a possibility that the Fed may decide to raise the policy interest rate in subsequent meetings. However, if inflation continues to slow down, it is anticipated that the Fed may keep the policy interest rate at 5.00-5.25% until the end of this year. Currently, the market largely does not foresee any interest rate cuts this year unless the U.S. economy significantly slows down beyond current assessments.