Top stories for the morning: Fed keeps rate on hold, Microsoft vs. OpenAI, Trump decides on Iran

The US Federal Reserve left the rate unchanged, but revised its inflation and growth forecasts, reinforcing fears of possible "moderate stagflation". In parallel, tense negotiations continue between Microsoft and OpenAI: the former threatens to withdraw from the deal if it does not get more favorable terms of access to AI technologies, while the developer ChatGPT seeks to complete the transformation into a commercial structure and attract funding. Against a backdrop of geopolitical instability, Donald Trump is considering a military strike on Iran, heightening tensions over the conflict with Israel. About these and other topics - in the review of key events for the morning of June 19.

On Wednesday, the U.S. Federal Reserve (Fed), left the benchmark rate at 4.25-4.5% per annum, but maintained its forecast of two cuts in 2025. That was in line with Wall Street's expectations. However, at the same time, the Fed lowered its economic growth forecast and raised inflation expectations, which raised experts' concerns about a possible scenario of stagflation - weak growth with persistently high price growth;

Fed chief Jerome Powell cautioned against overemphasizing the "dot plot" and emphasized that monetary policy will depend on actual data. The key risk is seen as the impact of duties, which could support inflation even as unemployment rises. 

Some analysts believe that the situation may lead to limited room for rate cuts, writes CNBC. Others, on the contrary, perceived the outcome of the meeting as a "soft pause" and the Fed's continued willingness to ease policy in the second half of 2025. Among the risks also noted geopolitics, slowing demand and weak effectiveness of the Fed's tools against shocks caused by tariffs or disruptions in oil supplies.

David Kelly of JPMorgan Asset Management said there is no hope for a quick rate cut. "The Fed is not going to go for it anytime soon," he said confidently. "The risks to inflation and unemployment have shifted upward. This is perceived by markets as a stagflation scenario, although it's more about risk-sharing," stated Jim Caron of Morgan Stanley. Bill Adams of Comerica Bank added that the Fed does not have effective tools to deal with stagflationary shocks such as duties or oil supply disruptions.

Donald Trump held a meeting with top advisers on Wednesday to discuss the possibility of U.S. involvement in the ongoing military conflict between Israel and Iran, reports Bloomberg. However, the White House did not disclose whether the president had made a final decision on whether to join strikes aimed at destroying Tehran's nuclear program.

Trump told reporters that there was no final decision yet, but reiterated his condemnation of the Iranian leadership for the delay in negotiations and reaffirmed his intention to prevent Iran from having nuclear weapons. According to data from the Wall Street Journal, Trump told advisers on Tuesday that he had approved the attack plan but delayed its execution pending Iran's response to his demands.

"I have ideas about what to do. But I like to make final decisions a second before the deadline - especially when it comes to war," Trump said.

Bloomberg sources in Western governments said the U.S. is privately expressing the same position as it has publicly - threatening to intervene if Iran does not capitulate. Potential U.S. action could begin in the next 24 hours, the sources said.

Trump also said Iran had offered to send a delegation to Washington for talks but expressed doubt whether Tehran could do so. He said Iran was "weeks" away from developing a nuclear weapon - a more certain timeframe than U.S. intelligence agencies have voiced.

"They should have made that deal," Trump said, referring to the negotiations that lasted in the final weeks before the Israeli strikes. - Now they wish they hadn't." At the time of the Israeli attack on Friday, another meeting between the U.S. and Iranian delegations was scheduled, which ultimately did not take place.

Trump's ambiguous statements are increasing tensions in the escalation between Israel and Iran. The president, who for many years opposed wars in the Middle East, is facing internal divisions among supporters - some of them oppose U.S. involvement in the conflict, Bloomberg writes.

Microsoft is ready to pull out of talks with OpenAI over the future of their multi-billion-dollar alliance if the parties can't agree on key issues - particularly the size of Microsoft's future stake in the ChatGPT creator. This was reported to the Financial Times by knowledgeable sources.

If negotiations fail, Microsoft expects to retain access to OpenAI's technology until 2030 through an existing commercial contract unless a more favorable agreement is reached. Nevertheless, the parties continue daily negotiations and express optimism that a deal will be reached, FT sources said.

OpenAI needs Microsoft's approval to complete its transformation from a nonprofit organization to a more conventional corporation, which will open access to additional funding and preparation for an IPO. Without it, the company could lose billions of dollars from investors such as SoftBank.

The parties are arguing over what percentage of shares Microsoft should get in the new structure - we're talking about a range of 20% to 49%. In addition, they are discussing the terms of a broader contract signed back in 2019 with Microsoft's initial investment of $1 billion.

Under the current agreement, Microsoft has exclusive rights to sell access to OpenAI models and to 20% of OpenAI's revenue up to $92 billion. Microsoft is not prepared to waive these terms or reduce its share of revenue, the FT writes.

Other contentious contract clauses include Microsoft's exclusive rights to sell OpenAI products through the Azure cloud, the right to prioritize infrastructure provisioning, and access to OpenAI's intellectual property until it reaches the level of "general artificial intelligence" (AGI) - the latter part will likely be excluded from the new agreement.

Hong Kong's Hang Seng index led the decline in Asia-Pacific markets on Thursday, down about 2 percent as investors assess the U.S. Federal Reserve's decision to keep interest rates unchanged amid the ongoing conflict between Israel and Iran, which continues to weigh on market sentiment, reports CNBC.

- Meanwhile, mainland China's CSI 300 index was down 0.8 percent.

- Japan's Nikkei 225 was losing about 1%, while the Topix index was down 0.6%. South Korea's Kospi was losing about 0.15%, but managed to then enter a slight plus.

- Australia's S&P/ASX 200 index was little changed.

- On Wall Street the day before, three key indices ended the trading day mixed. The Dow Jones fell 44.14 points, or 0.1%, to 42,171.66. The S&P 500 index slipped 0.03% to 5,980.87, while the Nasdaq Composite rose 0.13% to close at 19,546.27.