The Federal Reserve announced it will keep its benchmark interest rates intact after a Federal Open Market Committee meeting on Wednesday. However, the officials maintained their previous prediction of at least two cuts in 2025.
The Fed’s benchmark borrowing rate is currently set at 4.25% to 4.5%, remaining unchanged since January. The future rate cuts are expected to amount to half a percentage point, bringing the rate to 3.75% to 4% range for the first time since November 2022.
The officials also shared their views on economic growth and inflation in the wake of recent tariff policy changes. They now expect slower economic growth and expect inflation to spike up to 2.7% compared to the current level of 2.5%.
Speaking at a press conference after the meeting, Federal Reserve Chair Jerome Powell indicated that the Fed’s stance on rates will continue to be based on the economic indicators.
“If the economy remains strong, and inflation does not continue to move sustainably toward 2%, we can maintain policy restraint for longer,” Powell said. “If the labor market were to weaken unexpectedly, or inflation were to fall more quickly than anticipated, we can ease policy accordingly.”
The stock market reacted positively to the news, with Dow Jones Industrial Average futures jumping by 0.2%. S&P 500 futures ticked up by 0.3% as did futures attached to Nasdaq Composite.