Federal Reserve keeps rates at 4.75%-5.00%, signals cuts unlikely until inflation cools

The U.S. Federal Reserve left its benchmark interest rate unchanged at 4.75% to 5.00% in its latest policy decision, underscoring its determination to keep borrowing costs elevated until inflation shows clearer signs of easing. Policymakers said price pressures remain above the central bank’s 2% target, leaving little room for an immediate shift toward lower rates.

Chair Jerome Powell said the Fed needs to see further progress on inflation before considering any cuts, reinforcing expectations that interest rates may stay higher for longer. The message suggested that policymakers remain cautious about loosening financial conditions too soon, even as economic growth shows signs of resilience.

Markets reacted quickly to the announcement. The S&P 500 fell 0.5% after the decision, reflecting investor disappointment that rate cuts are not imminent. U.S. Treasury yields edged higher as traders adjusted expectations for a prolonged period of restrictive policy. The dollar also strengthened against major currencies, supported by the prospect of higher rates remaining in place for an extended period.

The decision highlights the Fed’s ongoing balancing act: slowing inflation without triggering a sharper downturn in the broader economy. For now, officials appear committed to maintaining pressure on prices before signaling any change in direction.