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The Federal Open Market Committee (FOMC) met on May 6–7, 2025, and is widely expected to keep interest rates steady at 4.25%–4.50% during this meeting. Markets anticipate no rate change on May 7 at 2 p.m. ET but view a rate cut as probable at the subsequent June meeting. This cautious stance reflects ongoing strong labor market conditions and inflation running slightly above the Fed’s 2% target, with core Personal Consumption Expenditures inflation at 2.6% year-over-year as of March 2025.
FOMC officials emphasize a measured approach, preferring to respond to incoming economic data rather than preemptively lowering rates amid uncertainties such as evolving tariff policies and their unclear economic impacts. The U.S. economy contracted in Q1 2025, partly due to import fluctuations linked to tariffs, adding to the cautious outlook.
Chair Jerome Powell and other officials have signaled that while rate cuts are likely later this year, immediate changes are unlikely. The Fed’s median forecast suggests two rate cuts in 2025, potentially lowering rates to the mid-3% range by year-end, but some members now expect fewer cuts than previously projected. Powell’s May 7 press conference is expected to provide further guidance on the Fed’s outlook and future policy moves.
In summary, the May 7 FOMC meeting is expected to maintain current rates with a forward-looking tone hinting at possible easing in June, balancing inflation concerns, labor market strength, and economic uncertainties from tariffs and trade policies.
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