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

The Federal Reserve left its benchmark interest rate unchanged at 4.25% to 4.50% after its latest policy meeting, underscoring its cautious stance as inflation remains above the central bank’s 2% target. The decision was widely expected and reflects policymakers’ view that more evidence is needed before easing borrowing costs.

In remarks following the announcement, Chair Jerome Powell said rate cuts are not imminent and that the Fed wants to see sustained progress on inflation before considering any move lower. He noted that while price pressures have eased from their peaks, the path back to the target remains uneven.

The Fed’s decision suggests it will continue to balance the risk of keeping rates elevated for too long against the danger of cutting too soon and reigniting inflation. Investors had been watching closely for any hint of a shift in tone, but the central bank offered little indication that policy will change in the near term.

Markets reacted modestly to the announcement. The S&P 500 slipped 0.3%, while the U.S. dollar strengthened slightly against major currencies as traders adjusted expectations for the timing of future rate cuts.