English
Fed Holds Rates Steady at 4.25%–4.50%, Signals Limited
Key Highlights from Jerome Powell’s Speech
1. Interest Rates on Hold
The Federal Open Market Committee (FOMC) confirmed that interest rates will remain steady. However, projections indicate two potential rate cuts totaling 50 basis points by the end of 2025, down from earlier expectations.
2. Tariffs Cloud Economic Outlook
Fed Chair Jerome Powell expressed concern over the renewed tariffs, stating they may lead to persistent inflationary pressures:
“We need to learn more over the summer about how tariffs will impact inflation and growth,” Powell said.
3. Inflation Still Above Target
The Fed’s inflation forecast for 2025 remains at 3%, exceeding the official 2% target. This persistent inflation has limited the Fed’s flexibility to lower rates aggressively.
4. Growth and Labor Market Forecasts
GDP growth was revised downward to 1.4% for 2025, compared to 1.7% in previous estimates.
The unemployment rate is expected to rise slightly to 4.5% by year-end.
Despite the economic headwinds, job market conditions remain robust, with stable wages and high labor force participation.
5. Political Pressure Rejected
Despite mounting criticism from former President Donald Trump, who has publicly pushed for aggressive rate cuts, Powell reaffirmed the Fed's independence and data-driven approach, distancing monetary policy from political influence.
