Fed Holds Interest Rates Steady Amid Inflation Uncertainty

Federal Reserve officials, including Chair Jerome Powell and regional leaders like Mary Daly and Lorie Logan, are signaling that interest rates will likely remain steady for the time being due to mixed economic signals, ongoing tariff impacts, and uncertainty around fiscal and trade policies. Inflation readings have shown some cooling, with the core Personal Consumption Expenditures index rising 2.5% annually in April, but many Fed officials remain cautious about whether tariffs will cause a persistent price increase. While the Fed has held its benchmark rate between 4.25%-4.5% since late 2024, futures markets suggest a rate cut is unlikely before September, though some officials, such as Daly, have left open the possibility of cuts later in the year if inflation data improve. The central bank continues to closely monitor labor market strength and inflation trends, balancing a cautious approach against pressures from high borrowing costs faced by consumers. President Trump has publicly urged the Fed to lower rates, but the Fed’s stance remains data-dependent and focused on achieving stable inflation near the 2% target. Overall, the Fed appears committed to maintaining higher rates until there is clearer evidence inflation is sustainably under control and economic risks diminish.