Fed Holds Firm on Rates Despite Strong Q2 GDP Growth

• The Federal Reserve kept interest rates unchanged at 4.25%–4.50%, marking its fifth consecutive hold.

• The decision follows a strong Q2 GDP rebound and inflation trends near the Fed’s 2% target.

• Despite political pressure, the Fed signaled possible rate cuts in September amid resilient labor conditions.

Today, the Federal Open Market Committee announced the new interest rate decision in the U.S., valid until September. 

After weeks of consideration, and despite external pressures from the U.S. President to lower interest rates, the Fed officially announced today a “no-change’ to the current 4.25% – 4.50% interest rate. 

The decision to freeze rates marks the fifth consecutive time the Fed opted to keep interests at 4.50%. On top of that, Jerome Powell is yet to oversee an interest rate slash during the current Trump administration — despite ending 2024 with three consecutive cuts. 

Tariff effects are still unfolding, despite trading negotiations moving on successfully, according to the White House. Today, the Bureau of Economic Analysis released its latest revision for the Gross Domestic Product reading for Q2, showing a significant increase in economic activity in the U.S.

This was the most expected outcome of today’s announcement. Heading into today’s FOMC meeting, we saw inflationary trends like the Headline CPI up 0.3% since May, and core CPI rising 0.1%.

With that said, FOMC members have already hinted at possible rate cuts in September. The reason to believe so is not at all unfounded, while inflation is certainly sticky, it is still hovering near the Fed’s 2% target.  Also, the job market, while soft, has shown incredible resilience in 2025 despite growing economic uncertainty and pressure from tariff-driven trade distortions.

Powell emphasized during today’s statement that the Fed has not yet made a decision on whether to lower rates at the next meeting, noting that two full rounds of inflation and employment data are still to come before September.