No Rate Cut Yet: Powell Holds Firm on Fed Policy

Highlights of the U.S. Fed Meeting:

On Wednesday, May 7, the U.S. Fed decided to maintain the main benchmark interest rates at 4.25% to 4.5%. As the Fed prepares to examine the economy before considering a rate decrease, Chairman Jerome Powell reaffirmed his position that there is "no hurry to cut rates."

On Wednesday, May 7, 2025, the U.S. Fed decided to maintain the key benchmark interest rates at 4.25% to 4.5% in the face of global uncertainties brought on by the ongoing trade war, the country's weakening economic growth, and erratic inflation patterns.

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The Committee agreed to keep the federal funds rate target range between 4-1/4 % and 4-1/2%. The Committee will carefully evaluate incoming data, the changing outlook, and the balance of risks when determining the magnitude and timing of future adjustments to the federal funds rate target range," the FOMC stated in an official statement.

Because of the significant level of uncertainty in the U.S. economy and the possibility of inflation brought on by hefty import tariffs, U.S. Fed Chairman Jerome Powell stated that he is not in a rush to lower interest rates. Powell emphasised that before a rate cut, the Committee is prepared to monitor and assess the country's economic situation. The U.S. Fed maintained key benchmark lending rates at 4.25 to 4.50% in its March 2025 policy announcement, predicting a two-quarter percentage point rate decrease by the end of this year.

According to economic data, in the first quarter of 2025, the United States' GDP shrank by 0.3% annually due to worries about a trade war with other countries. Despite a decline in U.S. GDP data, April 2025 payroll data revealed a 177,000 increase in employment, while the Personal Consumption Expenditures (PCE) Price Index remained steady in March after increasing 0.4% in February.

During the March policy meeting, Powell reaffirmed that, despite geopolitical worries, he is not in a rush to lower interest rates for the U.S. economy. In the March policy announcement, the FOMC stated, "should risks arise that could obstruct the achievement of the objectives, the committee would be ready to modify the monetary policy stance as appropriate."