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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