Fed keeps rates at 4.25%-4.50%, says cuts hinge on clearer inflation progress

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

In its statement, the Fed pointed to persistent price pressures and said officials need greater confidence that inflation is moving lower before considering any rate cuts. Chair Jerome Powell reinforced that message, indicating that easing is not imminent and that policymakers are prepared to wait for additional evidence before changing course.

The decision underscores the central bank’s cautious approach as it balances the risk of cutting too soon against the possibility of keeping policy restrictive for too long. Markets had been looking for clues on the timing of any future easing, but Powell’s comments dampened expectations for near-term action.

Financial markets reacted modestly after the announcement. US stock futures edged lower in after-hours trading, while the dollar strengthened slightly against major currencies. Investors now appear to be recalibrating their outlook for monetary policy, with the Fed signaling that inflation data will remain the key factor guiding its next move.