#FOMCMeeting FOMC Holds Rates Steady Amid Tariff Uncertainty
The Federal Open Market Committee (FOMC) concluded its May meeting today, announcing its decision to maintain the target range for the federal funds rate at 4.25% to 4.50%. This marks the second consecutive meeting where the central bank has opted to keep borrowing costs unchanged, following a series of rate reductions in late 2024.
The Committee cited that while economic activity continues to expand at a solid pace and the labor market remains strong, inflation remains somewhat elevated. Of particular concern is the increased uncertainty surrounding the economic outlook due to President Trump's recently implemented tariffs.
Federal Reserve Chair Jerome Powell, in the post-meeting press conference, emphasized the Committee's desire to assess the impact of these trade policy changes on inflation and economic growth before making any adjustments to monetary policy. He noted that while some near-term inflation expectations have edged up, the Fed remains committed to its 2% inflation target over the longer run.
The decision to hold rates steady was widely expected by market participants. However, the focus now shifts to the potential timing of future rate cuts. While the Fed's March projections indicated two rate cuts later this year, some economists believe the uncertainty introduced by tariffs could delay these actions until later in the year or even into 2026.
The FOMC will continue to monitor incoming economic data, including inflation figures, employment numbers, and the broader impact of trade policies, to inform its future decisions. The next FOMC meeting is scheduled for June 17-18, 2025.