Key points:
⚡Fed keeps rates steady
⚡Markets reverse gains
⚡Jay Powell stands pat
Central bank officials flagged growing risks of higher inflation and elevated unemployment as they stayed their hand from tweaking borrowing costs for the third straight time.
🧊 Fed Freezes Rates Again
The Federal Reserve kept interest rates
USINTR
unchanged on Wednesday, holding its key benchmark at the 4.25%–4.50% range for the third straight meeting, even as pressure mounted from President Donald Trump to slash borrowing costs.
Wall Street, most likely hopeful for a surprise policy shift, reversed course shortly after the announcement, with the S&P 500 slipping 0.3% and the Nasdaq falling 0.5%. The Dow clung to a modest 200-point gain, buoyed by Disney’s earnings-driven rally.
🔎 Tariffs, Inflation, and Uncertainty
The Fed’s statement delivered a clear message: buckle up. Officials flagged a jump in “uncertainty about the economic outlook,” pointing directly at the inflationary effects of Trump’s escalating tariff regime and its growing threat to employment.
“The risks of higher unemployment and higher inflation have risen,” the FOMC warned, underscoring why rate cuts remain off the table — for now.
💪 Fed Holds the Line
This comes as Trump continues to hammer Fed Chair Jay Powell for what he calls “too slow” policy moves, even calling him a “Major Loser” on social media.
Despite the rhetoric, the Fed is holding its line, emphasizing it needs more time to assess the impact of trade disruptions and price pressures.
💫 Markets Wanted a Nod — Got a Shrug
While a rate cut wasn’t expected this meeting, markets were clearly hoping for at least a dovish wink. Instead, Powell’s press conference leaned cautious — “we’re not in a hurry.”
With inflation still sticky and job market strength under threat, the central bank isn’t eager to loosen policy just yet.