The U.S. Federal Reserve has kept interest rates unchanged in its latest policy decision, holding steady until the next FOMC meeting on July 30. The Fed kept interest rates unchanged following its latest FOMC meeting, maintaining its focus on inflation control amid ongoing market volatility.
- Federal Funds Rate: 4.25% – 4.50% (unchanged)
After reports that inflation was growing more slowly than expected, corroborated by the PPI and CPI reports of May, hopes of an interest rate slash gained some momentum in U.S. markets. The Federal Reserve, which has yet to lower rates in 2025, signaled at the beginning of the year that it planned to implement two to three cuts throughout the year.
However, those plans abruptly changed as economic uncertainty drove the Fed into hawkish mode. While at first the Fed appeared to stop cutting rates to assess the stance of the new president, tariffs, and other abrupt measures, it soon became clear that broader macroeconomic pressures were influencing the Fed’s shift.
In no place could that uncertainty be felt better than in the American bond market. As investors began to lose faith in lower borrowing costs, they started demanding better returns in U.S. debt, ultimately driving yield costs higher.
Now, with even more uncertainty due to what appears to be an imminent entrance of the U.S. into the Israel-Iran conflict, Jerome Powell’s job of weighing in on economic growth vs inflationary pressure will likely get a lot harder.
Moving forward, we may experience heightened volatility as the market reacts to oil and energy prices. Later today, Powell will directly address the press market sentiment regarding interest rates, inflation, and economic stability moving forward.
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