Fed Holds Interest Rates Steady At 4.50%

U.S. Federal Reserve has decided to keep interest rates steady at 4.25% to 4.50% for the third meeting in a row.

Current Rate: 4.50%

Expected: 4.50%

Previous: 4.50%

Key Highlights:

No change in policy: The Fed did not raise or cut rates, signaling a wait-and-watch approach.

Inflation still a concern: Officials said inflation remains “somewhat elevated.”

Outlook uncertain: The Fed noted that uncertainty about the U.S. economy has increased.

Risks rising: There are growing concerns about both higher unemployment and persistent inflation.

Stagflation risk: The Fed seems worried about the chance of stagflation—a mix of slow growth and high inflation.

Focus on balance: The Fed said it is paying close attention to both price stability and job growth.

Market Reaction:

U.S. short-term interest rate futures slightly recovered after the announcement.

2-year U.S. Treasury yields fell to 3.783%, showing a shift in investor sentiment.

Traders expect a rate cut by July, despite the Fed holding steady.

Political pressure continues: The decision to hold rates comes even as former President Donald Trump pushes for cuts.

The Fed is staying cautious as it balances inflation, unemployment, and economic uncertainty. While markets hope for rate cuts soon, the central bank is not ready to move just yet.

Powell: U.S. Economy Strong, Fed in No Rush to Cut Rates Amid Uncertainty

In his press conference, Fed Chair Jerome Powell said the U.S. economy is strong and resilient, even if some recent data was distorted in the first quarter. He noted that inflation has come down a lot but is still running slightly above the 2% target. Powell emphasized there’s a lot of uncertainty, especially around tariffs, and it’s too early to tell how the risks will play out. He described current monetary policy as moderately restrictive and said the Fed is in a good position to pause and watch how things develop. “We’re in no rush—we can afford to be patient and let the outlook become clearer,” Powell added.

Powell said the Fed isn’t sure how long it will take for the outlook to become clear, so the best decision for now is to wait and watch. He emphasized that current policy is in a good place and it’s appropriate to be patient. If needed, the Fed can act quickly, but given the high uncertainty, it’s wise to hold steady and observe how things unfold.

Powell said that inflation is still above the target, and there’s an expectation it could rise further. He explained that the Fed can’t act too soon and needs more data before making decisions. He also mentioned that it’s been a while since the Fed had to balance two goals—controlling inflation and supporting growth—and they must keep that in mind moving forward.

Powell said that we haven’t had to deal with the issue of balancing two conflicting goals for a while, but we need to consider it now. There are situations where cutting rates could be the right move this year, and other situations where it wouldn’t be. He admitted he can’t say for sure what the best path for interest rates is.

Powell also mentioned that Trump’s calls for rate cuts don’t influence the Federal Reserve’s decisions. Powell feels that uncertainty is very high right now, and risks like higher unemployment and inflation are rising, although the data hasn’t shown it yet. He believes the current policy is in a good place, and the right thing to do is wait for more clarity. The economy is doing well, and the Fed’s policy isn’t overly restrictive.

Powell mentioned that the Fed has provided guidance for banks and conducted a one-time climate stress test. He also mentioned that the goal of maximum employment is broad and inclusive, not aimed at any specific demographic. While people are concerned, he mentioned that there haven’t been significant economic effects from tariffs yet, and the impact hasn’t fully hit.

He also mentioned that it’s unclear what the appropriate monetary policy response would be, so the Fed can wait for more clarity before acting. Powell mentioned that it’s too early to make a projection about rate cuts and that we’ll have to wait until June to see how things unfold. Depending on how the situation develops, the Fed may either cut rates or hold them steady.

Last year, when I said we wouldn’t want further cooling in the labor market, the unemployment rate was rising, which raised concerns about risks to the job market. Luckily, since then, the unemployment rate has remained steady. So, the worry about further cooling has reduced.

I can’t say exactly how much of an increase in unemployment is acceptable, as we need to consider both unemployment and inflation.

If we do see a significant decline in the job market, we would, of course, try to support it, but we would also hope that inflation doesn’t worsen at the same time. We’ll have to wait and see how things unfold.

Powell said that the recent sharp rise in imports—done to get ahead of new tariffs—should go down in the second quarter. As a result, exports may contribute significantly to GDP growth. However, this could make it more difficult to clearly understand the actual demand within the U.S. economy.

Powell says he can’t comment directly on the upcoming US-China trade talks in Switzerland, but he mentions that a new phase is starting as the government begins negotiations. He adds that the results of these talks could significantly change the situation — or maybe not — but it’s up to the administration to handle that.

Powell also says he has never asked to meet with the President and would never do that. He adds that the President has also never requested a meeting with him.

Update: Trump Slams Jerome Powell Over Inflation Handling

BREAKING: U.S. Federal Reserve Keeps Interest Rates Unchanged at 4.25%–4.50%

U.S. President Donald Trump criticized Federal Reserve Chair Jerome Powell, labeling him a “FOOL” and claiming he “doesn’t have a clue.” In a social media post, Trump stated, “‘Too Late’ Jerome Powell is a FOOL, who doesn’t have a clue. Other than that, I like him very much!” He argued that oil, energy, and grocery costs were significantly down, asserting there was “virtually NO INFLATION,” and that tariff revenues were “pouring into the U.S.” He concluded by calling Powell’s stance “THE EXACT OPPOSITE OF ‘TOO LATE!’” and added, “ENJOY!”