Fed holds rates at 4.25%-4.50%, says cuts unlikely until inflation eases

The Federal Reserve left its benchmark interest rate unchanged at 4.25% to 4.50% after its latest Federal Open Market Committee meeting, signaling that borrowing costs are likely to stay elevated until inflation shows more convincing signs of cooling.

In its statement, the central bank said inflation remains above its 2% target and that policymakers need to see sustained progress before considering rate cuts. Chair Jerome Powell reinforced that message in remarks following the decision, saying easing is not imminent and that the Fed wants clearer evidence that price pressures are receding in a durable way.

The decision was broadly in line with market expectations, but it tempered hopes for near-term monetary policy easing. Investors had been watching closely for signs that the Fed might begin preparing for cuts later this year. Instead, the central bank’s cautious tone suggested a longer period of restrictive policy may be needed to fully contain inflation.

Financial markets reacted modestly in after-hours trading. US stock futures edged lower, while the dollar strengthened against major currencies as traders adjusted expectations for the timing of any policy shift. The Fed’s stance underscores its continued focus on inflation control, even as it weighs the broader impact of high rates on the economy.