Federal Reserve Holds Interest Rates Steady Amid Inflation Concerns and Political Pressure
The Federal Reserve maintains interest rates at 4.25%-4.5% as inflation projections rise, with President Trump urging cuts despite economic forecasts.
Hoping for lower borrowing costs? Fed likely to stand pat again
Associated Press
Powell risks Trump's wrath with Fed interest rate decision
Washington Examiner
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Overview
- The Federal Reserve has kept interest rates unchanged at 4.25% to 4.5% for the fourth consecutive meeting amid economic uncertainty.
- Officials anticipate inflation to rise to 3% by year-end, prompting discussions of potential rate cuts despite lower growth projections.
- President Trump has criticized Fed Chair Jerome Powell for not lowering rates, calling him 'stupid' and 'political' in his demands.
- The average credit card APR is around 20-25%, while high-yield bank accounts offer rates from 3.6% to 5%.
- The Fed projects a 1.4% economic growth rate and an increase in the unemployment rate to 4.5% this year.
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Analysis
Center-leaning sources present a cautious perspective on the Federal Reserve's decision to maintain interest rates, emphasizing stability amid economic uncertainty. They highlight implications for consumers, such as credit card rates and mortgage forecasts, while subtly critiquing the prolonged high rates, reflecting a concern for financial impacts on everyday Americans.
"For now, analysts say the Fed remains in wait-and-see mode."
NBC News"Mortgage rates, which have been stuck near 7% for the past several months, are likely to stay higher for longer."
CNET"With interest rate cuts on pause for now, here's how you can focus on saving more and spending less where it counts."
CNET"Although the federal funds rate only directly dictates lending between banks, the central bank's monetary adjustments are typically passed on to consumers, affecting financing rates on loans and credit cards."
CNET"With interest rates currently holding steady, there's still time to maximize your earnings with a high-yield savings account or CD."
CNET"The central bank also expects inflation to worsen in the coming months, but it still foresees two interest rate cuts by the end of this year, the same as it had projected in March."
CBS News"The Federal Reserve maintained its position that the economy was stable, even as uncertainty among participants was rising."
Fortune"Prospective homebuyers who have been waiting for mortgage rates to drop for the past few years may soon have to adjust to the "higher for longer" rate environment, with mortgage loan rates fluctuating between 5% and 7% over the longer term."
CNET"The Fed last lowered interest rates in December, bringing its benchmark short-term rate to a range of 4.25% to 4.5%."
USA TODAY"Mortgage rates are likely to stay in the 6.75% to 7.25% range unless the Fed signals multiple cuts and backs up their policy with data."
CNET"The overall expectation from Wall Street is that there will be no change in the base rate, but here are some of the headline factors which may be influencing Chair Powell’s final decision to be announced later today."
Fortune"Those figures suggest inflation is largely coming under control, for now."
Associated Press"The economic backdrop is worrisome, with signs that the job market is slowing down and inflation pressures persisting."
NBC News"The combination of high debt and rising bond yields can be costly not just for the government but also for taxpayers."
NPR"The combination of persistent uncertainty alongside solid economic performance may prompt the Fed to hold interest rates steady on Wednesday."
ABC News"Keeping the rate unchanged would signal ongoing caution from the Fed as it continues to monitor how Mr. Trump's economic policies will play out."
CBS News"With the economy potentially pulling in both directions, Powell and other Fed officials have underscored in recent remarks that they are prepared to wait for clearer signals on which way to move."
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FAQ
The Federal Reserve kept interest rates steady to address rising inflation projections and maintain a cautious monetary policy amid ongoing economic uncertainty, aiming to avoid fueling price increases further or destabilizing the job market.
The Federal Reserve now projects inflation to reach 3% by year-end 2025, up from the previous March forecast of 2.7%. Real GDP growth is expected to slow to 1.4% this year, and the unemployment rate is projected to rise to 4.5%[2].
President Trump has publicly urged the Fed to cut rates, criticizing Fed Chair Jerome Powell for not doing so, while the Fed has maintained rates to balance inflation risks and economic stability despite political pressure[4].
The current federal funds rate is in the range of 4.25% to 4.5%. This level is significant because it influences borrowing costs across the economy and is set to manage inflation without triggering a recession or overheating the labor market[4].
The Fed’s steady rate policy is likely to keep credit card APRs high (currently around 20–25%) and help sustain elevated rates for high-yield savings accounts, which presently offer between 3.6% and 5%[4].
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