The Federal Reserve held its fifth policy meeting Tuesday and Wednesday, following which Fed Chair Jerome Powell announced the agency's interest rate decision: Rates will remain steady, despite mounting pressure for the Fed to reduce them. 

The Federal Reserve on Wednesday announced that it will leave its benchmark interest rate unchanged, as policymakers decided to hold rates steady amid elevated economic uncertainty as they continue to monitor inflationary pressures and labor market data.

The central bank's decision leaves the benchmark federal funds rate at a range of 4.25% to 4.5%, where it has remained following all five of the Fed's policy meetings this year. The central bank cut rates at its final three meetings in 2024, including a 50-basis-point cut in September and a pair of 25-basis-point reductions in November and December.

The Fed released a statement in conjunction with its decision, citing the rationale for holding the rates steady:

Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

Ten of the 12 Fed governors voted in favor of the decision to maintain the current rates. The two dissenting governors were Michelle W. Bowman and Christopher J. Waller, "who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting."

The announcement comes directly on the heels of a higher-than-expected second-quarter GDP performance, and amid other positive economic indicators. 

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The Fed is set to meet three more times in 2025. 

President Donald Trump, who's been quite vocal in his desire for the Fed to cut the rates and in his criticism of "Too Late" Powell, has not yet weighed in on the announcement, but we can rest assured he will shortly.

Editor’s Note: Thanks to President Trump’s leadership and bold policies, America’s economy is back on track.

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