🇺🇸 Federal Reserve Update – May 2025

As of May 20, 2025, the Federal Reserve has maintained its benchmark interest rate at 4.25% to 4.5%, marking the third consecutive meeting without a change. This decision reflects the Fed’s cautious approach amid ongoing economic uncertainties, including trade policy shifts and inflation dynamics.

🏦 Key Developments

📉 Interest Rate Outlook

  • The Federal Open Market Committee (FOMC) has adopted a “wait-and-see” stance, indicating that any future rate adjustments will depend on forthcoming economic data.

  • Atlanta Fed President Raphael Bostic has suggested that only one rate cut may occur in 2025, a revision from earlier projections of two cuts. This adjustment accounts for the potential inflationary effects of recent tariffs.

🗣️ Leadership Perspectives

  • New York Fed President John Williams emphasized that, despite market volatility, there has been no significant shift away from U.S. assets. He affirmed that the current monetary policy is appropriately calibrated for the prevailing economic conditions.

  • Williams also highlighted that economic uncertainties, particularly those stemming from trade policies, justify the Fed’s patient approach to monetary policy adjustments.

🧑‍💼 Organisational Changes

  • The Federal Reserve has announced plans to reduce its workforce by approximately 10% over the next few years. This initiative aims to streamline operations and align with long-term strategic goals.

📉 Credit Rating Adjustment

  • Moody’s has downgraded the U.S. sovereign credit rating, citing concerns over increasing national debt and fiscal policies. This marks the first time the U.S. lacks a top-tier rating from any major agency.

📅 Upcoming FOMC Meetings

  • June 17–18, 2025

  • July 29–30, 2025

The Fed will continue to monitor economic indicators closely to inform its policy decisions in these upcoming meetings.