Fed holds rates at 4.25%-4.50%, says cuts unlikely until inflation cools further

The Federal Reserve kept its benchmark interest rate unchanged at 4.25%-4.50% after its September policy meeting, signaling that borrowing costs are likely to remain elevated until inflation shows more convincing and sustained progress toward the central bank’s 2% target.

In its statement, the Federal Open Market Committee pointed to persistent inflation pressures and a labor market that remains resilient, suggesting policymakers see little urgency to ease policy. Chair Jerome Powell reinforced that message, saying rate cuts are not imminent and that officials need clearer evidence inflation is moving sustainably lower before considering a shift.

The decision was widely expected by markets, but it still prompted a modest reaction in financial assets. U.S. stock futures edged lower after the announcement, while the dollar strengthened against major currencies as investors scaled back expectations for near-term easing.

The Fed’s cautious stance reflects a balancing act between slowing inflation and avoiding unnecessary damage to economic growth. For now, policymakers appear committed to holding rates steady until they are confident that price pressures are easing in a durable way.