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

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

In its latest policy decision, the Fed pointed to persistent price pressures and said it needs additional evidence that inflation is easing sustainably before considering rate cuts. Chair Jerome Powell reinforced that message, indicating that policymakers are not prepared to lower rates yet and want to see more consistent disinflation in the months ahead.

The decision came as investors continued to weigh the outlook for monetary policy against signs of a resilient U.S. economy. Financial markets reacted modestly to the announcement: the S&P 500 fell 0.5% after the statement, while Treasury yields edged higher. The stronger yield backdrop helped lift the dollar index to 106.2, reflecting expectations that interest rates may remain higher for longer.

The Fed’s stance underscores the challenge facing policymakers as they try to balance inflation control with the risk of slowing growth. For now, officials appear committed to keeping policy restrictive until they are more confident that inflation is firmly on a path back to target.