Fed holds rates at 4.25%-4.50%, says cuts depend on clearer inflation progress

The Federal Reserve left its benchmark interest rate unchanged at 4.25% to 4.50% after its latest policy meeting, signaling that borrowing costs are likely to stay elevated until inflation shows more convincing signs of easing. The decision reflects the central bank’s continued caution as price pressures remain above its 2% target.

In remarks following the meeting, Fed Chair Jerome Powell said policymakers need to see sustained disinflation before considering any rate cuts. He indicated that the central bank is not prepared to ease policy based on short-term improvements alone, underscoring the Fed’s focus on ensuring inflation is firmly under control.

The decision was closely watched by investors looking for clues about the timing of future cuts. Markets reacted modestly to the announcement, with the S&P 500 slipping 0.3% and the U.S. dollar strengthening slightly against major currencies.

The Fed’s latest stance suggests it remains committed to keeping monetary policy restrictive for now, even as it balances the risk of slowing economic growth against the need to bring inflation fully back to target.