Fed holds rates at 4.25%-4.50%, signals cuts await clearer inflation progress

The Federal Reserve kept its benchmark interest rate unchanged at 4.25%-4.50% after its September Federal Open Market Committee meeting, underscoring its cautious stance as inflation remains above target and the labor market stays resilient.

In its latest policy decision, the central bank said it needs more evidence that inflation is moving sustainably toward its 2% goal before considering rate cuts. Chair Jerome Powell reinforced that message, indicating that easing is not imminent and that policymakers remain focused on balancing price stability with continued economic strength.

The decision reflects the Fed’s view that inflation risks have not yet fully receded, even as growth has shown signs of moderation. With employment conditions still relatively firm, officials appear in no rush to lower borrowing costs. The unchanged rate keeps the federal funds target range at its highest level in more than two decades.

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 US dollar edged higher against major currencies. Traders will now look to upcoming inflation and labor data for clues on when the Fed may begin easing policy.