Fed Rate Decision: No Cut Yet as Inflation Worries Hold Back Policy Shift
The Federal Reserve has once again decided to keep interest rates steady at 4.25% to 4.50%. This marks the fourth straight meeting without any change. The main reason is that inflation is still too high, and the Fed wants to make sure price growth slows down before cutting rates.
Fed Chair Jerome Powell said the central bank is being careful and patient. Ongoing issues like high inflation, tariffs, and mixed U.S. economic data are making the Fed hold off. Even though the job market is strong, inflation hasn’t returned to the target of 2%, which is key for the Fed.
Earlier this year, the Fed hinted at two possible rate cuts in 2025. But now, that plan depends on upcoming reports like GDP growth, job data, and PCE inflation. Some Fed members think a rate cut might come soon, while others believe no cut may be needed this year.
Analysts from Goldman Sachs and other firms now expect maybe only one rate cut in 2025, with more likely in 2026. They believe the Fed won’t act until inflation clearly comes down.
Now, all eyes are on July and August data. If inflation slows and the economy stays stable, there’s a chance of a rate cut in September. Right now, markets see about a 50–60% chance of that happening.
Impact:
If inflation cools down, the Fed might cut rates by September. If not, rate cuts could be delayed. Stocks, bonds, and the US dollar might react based on what the Fed says next.