The Federal Reserve announced on Wednesday that it will keep the federal funds rate unchanged at 4.25% to 4.5%, marking the fourth straight meeting without a change. This key rate influences borrowing costs and indirectly affects mortgage rates through its impact on Treasury yields.
In its statement, the Fed said, “Inflation remains somewhat elevated,” and noted that while economic uncertainty has eased, it is still a concern.
The Fed’s latest dot plot—a projection of future interest rate moves—still indicates the possibility of two quarter-point rate cuts later this year.
This decision was widely expected, as Fed officials have expressed caution about cutting rates too soon, particularly amid concerns that President Trump’s trade tariffs could push inflation higher. Lowering rates now might stimulate the economy but could also worsen inflation.
Minutes from the Fed’s May meeting also revealed worries about stagflation—a mix of slow growth, high inflation, and rising unemployment.
Meanwhile, President Donald Trump continued pressuring the Fed for aggressive rate cuts. Prior to the announcement, he called Chair Jerome Powell a “stupid person” and said he wanted interest rates lowered by 2% to 2.5%, downplaying inflation concerns.
