Federal Reserve – FOMC Meeting Update (May 7, 2025)
1. Interest Rate Decision:
On May 7, 2025, the Federal Reserve kept the federal funds rate unchanged at 4.25%–4.50%. This decision reflects ongoing concerns about inflation, which remains above the Fed’s 2% target.
2. Inflation Status:
The Core PCE index, the Fed’s preferred inflation gauge, held steady at 2.6%, showing no significant progress toward the 2% goal.
3. Labor Market:
The U.S. economy added 177,000 jobs in April, indicating continued strength in the labor market despite slowing GDP growth.
4. GDP Performance:
In Q1 2025, the U.S. GDP contracted by 0.3%, influenced by trade uncertainties and global economic pressures.
5. Jerome Powell’s Statement:
Fed Chair Jerome Powell emphasized a “data-dependent” approach, stating that interest rate cuts will only be considered once inflation shows a consistent decline toward 2%.
6. Market Outlook:
Analysts predict a possible rate cut in July 2025, depending on upcoming inflation and job data. The CME FedWatch Tool shows increased expectations for mid-year policy easing.
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