US Fed Keeps Interest Rates Unchanged For 4th Time, Still Expects 2 Cuts This Year
Jerome Powell-led FOMC keeps its key interest rates unchanged at 4.25%-4.50% for the fourth time in a row, in line with the market expectations.
US Fed Meeting Today Live: The US Federal Reserve on Wednesday kept its key interest rates unchanged at 4.25%-4.50% for the fourth time in a row, in line with the market expectations. As per the latest 'dot plot', the American central bank's officials continue to expect two rate cuts this year.
The US monetary policy review comes amid tariff woes and geopolitical tensions like the Israel-Iran war. Fed officials continue to wait for the fallout of US President Donald Trump's sweeping policy changes and tensions in the Middle East.
Fed policymakers overall continue to expect two rate cuts this year, according to the median projection, though seven of them expect no rate cut at all, up from four back in March.
The US markets remained unchanged after the Fed decision. After the decision, the Dow Jones was trading higher by 0.29% and the Nasdaq was also up by 0.33%.
In its statement, FOMC said, '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, it added.
'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," the FOMC said.
Multiple Federal Reserve officials have signalled hesitation about cutting interest rates, citing concerns that Trump's proposed trade tariffs could reignite inflation. While inflation has eased substantially from its post-pandemic highs, it remains close to the Fed's 2% annual target—leaving policymakers wary of acting too soon.
Talking about US Fed Chair Jerome Powell ahead of the interest rate decision, US President Donald Trump said, 'We have a stupid person at the Fed. He probably won't cut today… Maybe I should go to the Fed. Am I allowed to appoint myself at the Fed?"
He added, 'I don't even think he's political, I think he hates me."
The US economy shrank 0.3 per cent during the January-March 2025 quarter. The January-March expansion was the slowest in almost three years and was down from 2.4% in the last three months of 2024.
In the previous monetary policy review in May, the US Federal Reserve had kept its key interest rates unchanged at 4.25-4.50 per cent for the third time in a row. However, in the March review, Fed officials updated their rate cut projections and saw 50 basis points rate cut in 2025.
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