Fed keeps rates at 4.25%-4.50%, says cuts await clearer inflation progress

The Federal Reserve left its benchmark interest rate unchanged at 4.25% to 4.50% after its September Federal Open Market Committee meeting, signaling that policymakers remain cautious about inflation despite signs of resilience in the U.S. economy.

In its latest decision, the central bank pointed to persistent inflation risks and a labor market that remains solid, suggesting there is not yet enough evidence to justify an immediate shift toward lower borrowing costs. Chair Jerome Powell reinforced that message, saying rate cuts are not imminent unless inflation shows sustained and convincing progress toward the Fed’s 2% target.

The decision reflects the Fed’s effort to balance two competing concerns: preventing inflation from reaccelerating while avoiding unnecessary pressure on growth. For now, officials appear to be waiting for more data before considering any easing cycle.

Markets reacted modestly to the announcement. The S&P 500 slipped 0.3% as investors adjusted expectations for the timing of future cuts, while the U.S. dollar edged higher against major currencies. The muted response suggested the outcome had largely been anticipated, even as traders continue to watch incoming inflation and employment data closely for clues about the Fed’s next move.