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6h ago

Federal Reserve Holds Rates Steady at 4.25–4.50% for Fourth Meeting

Citing solid hiring alongside persistent inflation pressures the Fed projected two rate cuts later this year

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Overview

  • The Fed kept its benchmark federal funds rate unchanged at 4.25–4.50% for the fourth straight meeting.
  • Real GDP contracted at a 0.2% annualized rate in the first quarter while employers added 139,000 nonfarm jobs in May and unemployment remained at 4.2%.
  • The personal consumption expenditures price index rose 2.1% year-over-year in April with the core PCE gauge at 2.5%.
  • Chair Jerome Powell highlighted the need to assess the impact of trade tariffs after resisting pressure from President Trump to lower borrowing costs.
  • Despite holding rates now, officials anticipate two reductions before year-end as the ECB has moved in the opposite direction by cutting its main refinancing rate to 2%.