Overview

• The Federal Reserve kept its benchmark interest rate at 4.25–4.50% following its May 2025 policy meeting, marking the third consecutive pause this year.
• Chair Jerome Powell emphasized the need to assess the economic impact of ongoing tariff policies before making any adjustments to monetary policy.
• The decision comes against a backdrop of mixed economic data, including solid job growth in April, persistent inflation at 2.3%, and a first-quarter GDP contraction of 0.3%.
• President Trump continues to pressure the Fed to lower rates to counteract the economic effects of his tariff measures, but the central bank reaffirmed its independence.
• Analysts forecast multiple rate cuts later in 2025, but the Fed has signaled it will wait for more concrete evidence of trade policy impacts before easing policy further.