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% after its September Federal Open Market Committee meeting, signaling that policymakers remain cautious about inflation despite signs of resilience in the U.S. economy. The decision reflects the central bank’s view that price pressures have not yet eased enough to justify an immediate shift toward lower borrowing costs.

In its statement, the Fed pointed to persistent inflation risks and a solid labor market, suggesting that economic conditions remain strong enough to support a restrictive policy stance. Chair Jerome Powell reinforced that message, saying rate cuts are not imminent unless inflation shows clearer and more sustained progress toward the Fed’s 2% target.

The decision was closely watched by investors looking for clues about the timing of future easing. Markets reacted modestly to the announcement, with the S&P 500 slipping 0.3% and the U.S. dollar strengthening slightly against major currencies.

The Fed’s latest move underscores its commitment to keeping policy tight until officials are confident inflation is on a durable downward path. For households and businesses, that means borrowing costs are likely to remain elevated for now, even as markets continue to speculate about when the first rate cut may arrive.