FOMCMeeting#
In the Federal Open Market Committee (FOMC) meeting held today, Wednesday, May 7, 2025, the Federal Reserve (the U.S. central bank) unanimously decided to keep the federal funds rate unchanged, within the current range of 4.25% to 4.5%, for the third consecutive time.
Key Points from the Fed Statement:
Increasing Economic Risks: The statement noted rising risks related to high unemployment and inflation rates, increasing the uncertainty in economic forecasts.
Monitoring Economic Data: The Fed reaffirmed its commitment to closely monitor incoming economic data, including labor market indicators, inflation pressures, and financial and international developments, to assess the appropriate timing for any future adjustments in monetary policy.
Continued Reduction of the Balance Sheet: The Fed will continue to reduce its holdings of government securities and mortgage-backed securities, as part of its efforts to curb inflation.
Statements by Jerome Powell, Chair of the Fed:
In the press conference following the meeting, Powell indicated that the U.S. economy faces increasing challenges due to current trade policies, including the high tariffs imposed by the U.S. administration. He emphasized that the Fed will remain flexible and ready to adjust its monetary policy if risks arise that could hinder achieving its dual goals of price stability and full employment.
Political Tensions and Their Impact:
The Fed's decision comes amid increasing political pressure from President Donald Trump, who is calling for interest rate cuts to stimulate the economy. Despite this pressure, the Fed insists on its independence and decisions based on economic data, highlighting the challenges it faces in maintaining its credibility amid political tensions.
Future Expectations:
As economic uncertainty continues and risks rise, the Fed may need to reassess its monetary policy in upcoming meetings, especially if inflationary pressures persist or economic growth slows significantly.
For more details, you can watch the full press conference of the Chair.
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