Fed holds rates at 4.25%-4.50%, signals no cuts until inflation cools further

The Federal Reserve kept its benchmark interest rate unchanged at 4.25% to 4.50% after its latest policy meeting, underscoring its cautious stance as inflation remains above the central bank’s 2% target.

In its statement, the Fed said it needs to see more convincing evidence that price pressures are easing on a sustained basis before considering any rate cuts. Chair Jerome Powell reinforced that message, indicating that policymakers are not prepared to begin easing monetary policy until inflation shows clearer and more durable progress toward the target.

The decision was widely expected by investors, but it still pushed back hopes for near-term rate cuts. Markets had been looking for signs that the Fed might move sooner to support growth, yet the central bank’s latest guidance suggests borrowing costs will stay elevated for now.

Financial markets reacted modestly to the announcement. US stock futures slipped slightly in early trading, while the dollar strengthened against major currencies as traders adjusted expectations for the timing of future policy easing.

The Fed’s latest move highlights the challenge facing policymakers as they try to balance slowing inflation against the risk of keeping rates high for too long. For now, the central bank appears focused on ensuring that inflation is firmly on a downward path before changing course.