Fed holds rates steady, KPMG watches client financing pressure

The bigger story for KPMG teams was not the unchanged rate. It was the message that borrowing costs may stay sticky, even after the Federal Open Market Committee held the federal funds target range at 3.5 percent to 3.75 percent and kept the interest rate paid on reserve balances at 3.65 percent. For consultants, auditors and deal advisers, that means the same hard conversations keep coming back: refinancing, valuation marks, acquisition timing, impairment testing and cash preservation.

The June 17 statement gave clients little reason to expect relief soon. The Fed said economic activity was expanding at a solid pace despite elevated uncertainty tied in part to conflict in the Middle East, while productivity growth and capital investment remained strong. Job gains continued to keep pace with the workforce and unemployment had changed little, but inflation was still running above the Fed’s 2 percent goal. In practical terms, that leaves management teams trying to defend budgets and capital plans in a world where growth is holding up but financing is still expensive.

That is where KPMG audit work gets more sensitive. Higher-for-longer rates keep discount rates, expected cash flows and terminal value assumptions under pressure, which can affect impairment tests, fair value measurements, going-concern assessments and expected-credit-loss judgments. Pension assumptions also stay in play as rate expectations shift the math on liabilities and funding. In the audit room, that translates into more challenge around the reasonableness of models, more documentation of management’s assumptions and less tolerance for weak support around why a company believes its numbers still hold.

The same backdrop reshapes tax and deal advisory conversations. Treasury teams are still weighing capital structure choices against refinancing risk, and tax professionals are likely to see continued focus on transfer pricing, financing structures and the timing of transactions that trigger compliance work. Deal advisers, meanwhile, have to help clients decide whether to push ahead, wait, or renegotiate terms when the market can move against them even if the policy rate does not. After the meeting, the 2-year Treasury yield climbed to 4.216 percent, its highest since February 2025, and the 10-year rose to 4.495 percent, a reminder that markets can tighten even without a rate hike.

Kevin Warsh’s first meeting as Fed chair made the signal even sharper. He said he did not submit his own forecast in the Summary of Economic Projections and announced five task forces to review communications, the balance sheet, data sources, productivity and jobs, and the inflation framework. Nine Fed officials now expect at least one rate hike by the end of 2026, and the median year-end policy-rate projection moved up to 3.8 percent from 3.4 percent in March. For KPMG, the useful read is simple: stable policy today does not mean stable client behavior tomorrow, so teams should keep preparing for tighter financing conditions, slower deal execution and more pressure on judgment-heavy estimates.