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% in its latest policy decision, signaling that borrowing costs are likely to stay elevated until inflation shows more sustained progress toward the central bank’s 2% target.

In its statement, the Fed pointed to persistent price pressures and said it needs greater confidence that inflation is moving lower before considering any rate cuts. Chair Jerome Powell reinforced that message, indicating that policy easing is unlikely in the near term unless incoming data show clearer and lasting cooling in inflation.

The decision came as markets continued to weigh the timing of the Fed’s next move. Investors had been looking for signs that the central bank might begin easing later this year, but the latest guidance suggests officials remain cautious about moving too quickly.

Financial markets reacted modestly to the announcement. US stock futures slipped slightly after the decision, while the dollar strengthened against major currencies as traders adjusted expectations for the path of monetary policy.

The Fed’s stance underscores the challenge facing policymakers as they try to balance slowing inflation with the risk of keeping rates restrictive for too long.