Fed holds rates at 4.25%-4.50%, signals no cuts until inflation eases

The Federal Reserve left its benchmark interest rate unchanged at 4.25% to 4.50% after its latest policy meeting, underscoring that inflation remains too elevated to justify an early shift toward easier monetary policy.

In its statement, the central bank pointed to persistent price pressures that continue to run above its 2% target. Fed Chair Jerome Powell reinforced that message, saying policymakers will need to see clearer and more sustained progress on inflation before considering rate cuts. The remarks suggest the Fed is in no hurry to begin easing, despite growing market expectations for lower borrowing costs later this year.

The decision was broadly in line with expectations, but it still signaled a cautious stance as officials weigh the risk of cutting too soon against the possibility of keeping policy restrictive for too long. Investors reacted modestly to the announcement. US stock futures edged lower, while the dollar strengthened against major currencies as traders adjusted their outlook for the timing of any future rate reductions.

The Fed’s latest move highlights its continued focus on restoring price stability, even as higher rates keep financial conditions tight for households and businesses.