Fed holds rates at 4.25%-4.50%, says cuts await 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 sustained progress toward the central bank’s 2% target.

In its statement, the Fed pointed to persistent price pressures and said it needs additional evidence that inflation is cooling before considering any rate cuts. Chair Jerome Powell reinforced that message, indicating that policymakers are not prepared to ease monetary policy yet and want to see a clearer and more durable decline in inflation.

The decision was broadly in line with market expectations, but it tempered hopes for near-term relief in financial conditions. Investors had been looking for signs that the Fed could begin cutting rates later this year, yet the latest guidance suggests the central bank remains cautious about moving too quickly.

Markets reacted modestly to the announcement. US stock futures edged lower, while the dollar strengthened against major currencies as traders adjusted expectations for the timing of any future easing. The Fed’s stance underscores its focus on restoring price stability even as it weighs the risks of keeping rates restrictive for too long.