The United States Federal Reserve decided to maintain its benchmark interest rate at 4.25 percent to 4.5 percent during its latest meeting, despite ongoing pressure from President Donald Trump for rate cuts. This marks the fourth consecutive meeting where the Fed has held rates steady, with the last cut occurring in December 2025. The decision reflects the central bank's cautious approach amid signs of a weakening economy, including a decline in retail sales and an increase in jobless claims.
In a statement, the Fed acknowledged the ongoing economic uncertainty, stating, “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run.” The Fed's forecasts indicate a downward revision of GDP growth to 1.4 percent from 1.7 percent and an increase in inflation expectations. Fed Chair Jerome Powell emphasized the elevated uncertainty surrounding economic projections.
“These individual forecasts are always subject to uncertainty, and as I’ve noted, uncertainty is unusually elevated,” said Fed Chair Jerome Powell.
The Fed's decision comes amidst geopolitical tensions, particularly related to the conflict between Israel and Iran, which have implications for oil prices and overall economic stability. As the Fed navigates these challenges, it remains to be seen how future monetary policy will adapt to shifting economic conditions and external pressures.
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