Fed keeps rates at 4.25%-4.50%, says cuts unlikely until inflation eases further

The Federal Reserve left its benchmark interest rate unchanged at 4.25%-4.50% at its latest policy meeting, signaling that borrowing costs are likely to stay elevated until inflation shows more sustained progress toward the central bank’s 2% target.

In its statement, the Fed pointed to persistent price pressures and said it needs greater confidence that inflation is moving lower on a durable basis before considering rate cuts. Chair Jerome Powell reinforced that message, indicating that policymakers are not prepared to ease monetary policy yet and will continue to monitor incoming data closely.

The decision was broadly in line with market expectations, but it underscored the Fed’s cautious stance as it balances the risk of keeping policy restrictive for too long against the possibility that inflation could remain sticky. Investors responded modestly to the announcement. The S&P 500 fell 0.3%, while the dollar index rose 0.2% against major currencies.

The Fed’s latest move suggests that any shift toward lower rates will depend on clearer evidence that inflation is cooling steadily, rather than on short-term improvements in the data.