Fed keeps rates at 4.25%-4.50%, says cuts await clearer inflation progress

The Federal Reserve left its benchmark interest rate unchanged at 4.25%-4.50% after its September policy meeting, underscoring its cautious stance as inflation remains above target and the labor market continues to show resilience. The decision signals that policymakers are in no rush to ease borrowing costs until they see more convincing evidence that price pressures are moving sustainably toward the Fed’s 2% goal.

In remarks following the meeting, Chair Jerome Powell said rate cuts are not imminent and that the central bank needs to be confident inflation is on a durable downward path before considering a shift in policy. The Fed’s latest move reflects a balancing act between slowing inflation and avoiding unnecessary damage to economic growth.

Financial markets responded modestly to the announcement. The S&P 500 fell 0.3% as investors reassessed the outlook for monetary policy, while the dollar index rose 0.2% against major currencies, reflecting expectations that US rates may stay elevated for longer.

The Fed’s decision reinforces a broader message: despite progress on inflation from its recent peaks, policymakers remain focused on ensuring that price gains are firmly under control before beginning any rate-cut cycle.