Fed decision live: Powell to speak after holding rates steady

Reuters

6 hours ago

What's happening?
Fed kept rates at 4.25 to 4.5%
Chair Jerome Powell press conference at 2:30 p.m.
Middle East crisis, tariffs weigh on decision
US President Donald Trump wants rate cuts
He called Powell a 'stupid person'
Just joining us? Here's what the Fed said
19 minutes ago
14:11 EDT
Howard Schneider, Federal Reserve Correspondent
The Federal Reserve held interest rates steady and policymakers signaled borrowing costs are still likely to fall this year.
But it slowed the overall pace of expected future rate cuts in the face of estimated higher inflation flowing from the Trump administration's tariff plans.
In new economic projections, policymakers sketched a modestly stagflationary picture of the U.S. economy, with economic growth slowing to 1.4% this year, unemployment rising to 4.5% by the end of this year, and inflation finishing 2025 at 3%, well above the current level.
"Uncertainty about the economic outlook has diminished but remains elevated," the Fed said in its latest policy statement.
SLOWER PACE OF FUTURE CUTS
While policymakers still anticipate cutting rates by half a percentage point this year, as they projected in March and December, they slightly slowed the pace from there to a single quarter-percentage-point cut in each of 2026 and 2027 in a protracted fight to return inflation to the central bank's 2% target.
Under the new projections, inflation remains elevated at 2.4% through 2026 before falling to 2.1% in 2027 amid largely stable unemployment.
Those outcomes were both embedded in the new projections, the Fed's latest thinking about how Trump's suite of economic policies is expected to shape the economy this year.
Fed sees unemployment at 4.5% by year-end
21 minutes ago
14:08 EDT
That's up from March's unemployment rate forecast of 4.4%.
Fed sees inflation rising to 3% at end of 2025
23 minutes ago
14:07 EDT
That's up from a forecast of 2.7% in March.
Fed policymakers see 1.4% GDP growth in 2025
24 minutes ago
14:06 EDT
That's down from a prediction of 1.7% in March
Highlights from the Fed's rate decision
26 minutes ago
14:04 EDT
Economic activity has continued to expand at a solid pace.
The unemployment rate remains low
Labor market conditions remain solid.
Inflation remains somewhat elevated.
Uncertainty about the economic outlook has diminished but remains elevated
27 minutes ago
14:03 EDT
Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has diminished but remains elevated. The Committee is attentive to the risks to both sides of its dual mandate.
In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
30 minutes ago
14:00 EDT
The Federal Reserve said Wednesday it will keep the federal funds rate target range at 4.25 to 4.50%
36 minutes ago
13:54 EDT
Mike Dolan, Markets Editor-at-Large
Even if the Federal Reserve thought a window had opened for it to resume its interest rate cutting campaign, there's a risk it may now hold back, precisely because of the relentless political pressure President Donald Trump has put on it to ease policy.
And that's not just Fed Chair Jerome Powell being stubborn.
One of its key concerns at this stage of its monetary policy cycle is that markets, businesses and households will not believe it has the staying power or political support to wring out the last vestiges of excess inflation and bring inflation expectations back durably to its 2% target.
A rate cut as soon as this week - especially with futures markets not pricing in another one until September - would stoke suspicion that the move was forced by the White House.
Where major central banks stand on rate cuts
44 minutes ago
13:46 EDT
In March, Reuters reported that big developed market central banks started turning cautious after a series of interest rate cuts and as uncertainty in global economics and politics grows.
Here's a look at where 10 big central banks now stand:
Early Fed chair nomination could rattle markets
13:41 EDT
Lewis Krauskopf
Trump has said that he would soon nominate Jerome Powell's successor, with nearly a year left before the Federal Reserve chair's term ends.
Investors said that could present a risky proposition for markets.
While Trump has backed off from comments that he could fire Powell, and a recent U.S. Supreme Court ruling eased worries that he could do so, he said earlier this month that a decision on the next Fed chair would be coming soon.
Any choice deemed as being under Trump's thumb would alarm Wall Street, given the broad sentiment that an independent Fed is critical to its ability to function properly.
Markets will want a Fed chair who is "laser focused" on economic balance and its dual mandate, said Callie Cox, chief market strategist at Ritholtz Wealth Management.
"Any Wall Street manager would tell you that Fed independence is the golden rule of markets," Cox said. "To move away from that can introduce a whole host of issues."