Federal Reserve – FOMC Meeting Summary (May 7, 2025)

1. Interest Rate Decision

At its May 7 meeting, the Federal Reserve chose to maintain the federal funds rate at 4.25%–4.50%. The decision highlights persistent inflation concerns, as price levels remain above the central bank’s 2% target.

2. Inflation Update

Core PCE, the Fed’s preferred measure of inflation, remained unchanged at 2.6%. This plateau suggests limited progress in moving toward the 2% objective.

3. Labor Market Conditions

The U.S. labor market continued to show resilience, with 177,000 jobs added in April. This strength comes despite broader economic concerns and slower GDP growth.

4. GDP Performance

The U.S. economy shrank by 0.3% in the first quarter of 2025, largely due to trade-related uncertainties and global economic headwinds.

5. Comments from Chair Powell

Fed Chair Jerome Powell reiterated the central bank’s data-driven approach, noting that rate cuts would only be considered once inflation shows sustained movement toward the 2% goal.

6. Market Expectations

Looking ahead, analysts are eyeing a potential rate cut as early as July 2025, contingent on further inflation and employment data. According to the CME FedWatch Tool, market expectations for mid-year easing have risen.