Federal Reserve Holds Rates Unchanged
June 18, 2025 — In a widely anticipated move, the Federal Reserve’s Federal Open Market Committee (FOMC) has voted unanimously to maintain the target federal funds rate at 4.25%–4.5%. This marks the fourth consecutive time the Fed has held rates steady, as officials prioritize clarity in economic data and mounting geopolitical and economic uncertainties .
The decision comes amid persistent inflation slightly above target, currently near 2.4%, and a labor market that remains tight, though recent signs indicate cooling demand . The Fed’s updated projection shows slower GDP growth (~1.4%) and slightly higher unemployment (~4.5%) for 2025, reflecting concerns over tariffs and rising energy prices linked to global tensions.
Chair Jerome Powell emphasized the Fed’s commitment to a data-driven approach, stressing it will not rush rate cuts amid ongoing risks—from trade frictions and inflationary pressure to geopolitical issues such as Middle East tensions.
Despite market expectations projecting up to two rate cuts later this year, the FOMC remains divided, with some forecasts trimming the number of expected cuts. Officials signaled patience, indicating any policy shift would depend on greater clarity around economic conditions.
Bottom line: The Fed kept rates steady at 4.25%–4.5% for the fourth time, emphasizing caution and awaiting more economic clarity. Inflation remains above goal, growth is slowing, and geopolitical factors—including tariffs and oil—are shaping the Fed’s cautious stance.
