The Fed keeps interest rates stable again

The Fed kept interest rates stable on Wednesday, ignoring the pressure to cut them and sticking to certain strategies as inflation showed signs of cooling but was still above the target.

“Although net export volatility has affected the data, recent indicators show that economic activity continues to expand at a solid rate. Unemployment remains low and labor market conditions remain solid. Inflation remains somewhat higher,” Federal Statement Reading.

Decisions and the reasoning around, Market expectationskeeping the target interest rate for federal funds within its current range of 4.25% to 4.50%. Futures traders attending the meeting had less than 1% chance of cutting, so the announcement was unlikely to be surprised.

Looking ahead, the Fed continues to look forward to it Cut two speeds This year.

Details of Economic Forecast Statement and Powell’s Commentary

The latest from the Federal ReservePoint the picture“Showing a clear shift in caution, the narrowing of consensus and the scope of expectations is expanding. Currently, of the 19 officials who had at least 2 lowered in 2025, only 10 lowered interest rates twice in 2025, which is not cut at all from most in March. There are only 4 lowers, only 4. Meanwhile, policy makers have a higher core appearance, bringing their rising core upwards, which will increase the accumulated monetization, which will rise to a year.

In his speech and answers to media questions, Powell pointed out that the “trade policy issue” between officials said he hoped GDP would slow down and said that the effects of tariffs were only just beginning to emerge, partly because no one knew where effective tariff levels would land. He reiterated that while “the process is hard to predict” and “we want to get more data,” tariffs will push prices higher before trying to relieve price pressure.

Asked directly about the White House insult, Powell said that ensuring the health of the U.S. economy is “critical for us.”

Great political pressure

If the Fed’s decision is not surprising, then the political background remains extraordinary.

President Donald Trump has repeatedly called for immediate cuts to the economy in trade tensions and personally targeted Fed Chairman Jerome Powell, who was appointed in 2017, who he called him a “fool” on social media Further comments on Wednesday.

But Powell and his colleagues cited the expectations of inflation and the still difficult global prospects. Although title inflation has eased, it is still above the Fed’s 2% target. Since taking office early this year, Trump’s various tariffs – announced fragmentary and often unpredictable – have introduced new volatility into supply chains and price forecasts.

Fed prepares for pressure

“We don’t think we need to be in a hurry,” Powell said. in May. “We felt it was appropriate to be patient.”

Of course, this kind of patience is risky. U.S. GDP signed in the first quarter and may do so again in the second quarter. Employment growth is somewhat slow. Even though the market bounced back from April’s “Liberation Day” lows, consumer sentiment remains uneasy. Meanwhile, Fed officials seem to be more concerned about focusing on inflation than being seen as non-responsive.

The credibility of the central bank and its value of independence may be the most powerful tool at present.