FED decides to keep interest rates unchanged

In Washington DC, the Fed decided to maintain its policy interest rate in the current range of 4.25% - 4.50% and gave little detail on when it might cut borrowing costs further, as inflation in the US remains above target, but the economy continues to grow and unemployment remains low. In its statement after the meeting, the Fed assessed that inflation has "made progress" toward its 2% target, although it noted that the pace of price increases "remains elevated". Accordingly, key inflation indicators have recently been about 0.5% higher than the Fed's target. Most Fed officials believe that inflation restraint will continue to progress this year, but interest rates should be kept on hold pending data to confirm this.

The US central bank also assessed that the world's No. 1 economy continues to grow at a solid pace, the unemployment rate is stable at low levels and labor market conditions remain stable. Fed policymakers said they will carefully assess data, development prospects and the balance of risks to determine the timing and scope of future interest rate adjustments.

The Fed’s decision to keep interest rates unchanged was widely expected by economists, after three consecutive cuts in 2024 that reduced the benchmark interest rate by 1 percentage point. The debate at the US central bank is now over how many more points it needs to cut, with policymakers predicting two 0.25 percentage point rate cuts in 2025.

The Fed said it would assess inflation and the impact of new policies from the Trump administration on price pressures, the labor market and economic growth in the coming period, before continuing to ease monetary policy.