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The Federal Reserve Keeps Interest Rates Unchanged: Markets Await Next Move

The U.S. Federal Reserve decided in its meeting held on May 7, 2025, to maintain the benchmark interest rate within the current range of 4.25% to 4.5%, for the third consecutive time this year. This decision comes as part of a “wait-and-see” strategy to assess the impact of previous monetary policies on inflation and economic growth.

Following the decision, several Gulf central banks, led by the Saudi Arabian Monetary Authority (SAMA), announced that local interest rates would remain unchanged, in line with the Fed's policy. The repo rate in Saudi Arabia stood at 5%, while the reverse repo rate remained at 4.5%.

Market attention is now focused on the Fed's upcoming meeting in June, with increasing expectations that the summer may see the first steps to reduce interest rates by 25 basis points. Amid this anticipation, the U.S. dollar has maintained its strength, while gold prices have seen limited movements.

These developments reflect a continuing cautious stance in global monetary policy, amid attempts to balance between curbing inflation and supporting economic growth.