The Federal Reserve has officially kept interest rates unchanged at 4.25-4.50%, aligning with market forecasts and reaffirming its cautious stance amid lingering economic uncertainty.
Running into today’s decision, nearly all estimations were that the Fed would hold rates. Primarily due to the economic uncertainty regarding the new administration’s aggressive foreign trade stance, Fed Chair Jerome Powell had already hinted that they would not cut rates given ongoing inflation concerns
Only a couple of weeks ago, we got the print for U.S. economic growth during the first quarter of 2025. The results, showing early signs of a potential recession, fueled concerns that the economy may be slowing down faster than anticipated.
While during the first months of the year, inflation has shown some signs of easing, risks remain high, making it too soon for the Fed to consider rate cuts. The Fed’s decision reflects a strategy of maintaining financial stability while continuing to monitor economic trends for future adjustments.
Looking ahead, the next FOMC meeting in June will be closely watched, as investors speculate whether Powell will reconsider rate cuts later this year. Powell himself has admitted that he expects to see at least two rate cuts this year, so investors hoping for lower interest rates should remain optimistic moving forward.
For now, the Fed remains firm, holding rates steady despite external pressures.
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