US Fed Holds Rates Steady at 4.25–4.50%, Powell Cites Inflation and Uncertainty Amid Trade Tensions

Federal Reserve Chair Jerome Powell signals no immediate rate cuts, as economic uncertainty and inflation risks continue to weigh on monetary policy decisions.

Washington, May 8, 2025:
In a widely anticipated move, the US Federal Reserve kept its benchmark interest rates unchanged at 4.25% to 4.50% during its policy meeting on Wednesday, May 7. The decision reflects continued concerns over persistent inflation, global trade tensions, and a slowing US economy.

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“The Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent,” said the Federal Open Market Committee (FOMC) in its official statement, adding that it will continue to assess incoming data, the evolving economic outlook, and associated risks.

Fed Chair Jerome Powell emphasized that the central bank is “in no hurry” to cut rates, noting that inflationary pressures—exacerbated by the Trump administration’s tariffs—remain a key concern. He underscored that the path of future policy would be guided by careful analysis of economic data.

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Economic Indicators and Outlook

• The US GDP contracted by 0.3% in Q1 2025 amid the ongoing trade war, raising concerns about growth.
• Despite the contraction, April payroll data showed an encouraging addition of 177,000 jobs, while the PCE price index held steady in March.
• Powell reiterated a cautious approach: “Consumers are still spending… It’s a healthy economy, albeit clouded by subdued sentiment.”

Political Pressure and Powell’s Response

Responding to repeated public criticism from President Donald Trump demanding rate cuts, Powell firmly stated, “It doesn’t affect doing our job at all.”

Powell’s remarks come amid rising political tension as the Fed maintains its stance of policy independence.

Expert Reactions

William Dudley, former New York Fed President, told Bloomberg,

“The Fed is not sure where tariffs will land and what their consequences will be on growth versus inflation. This is about risk management—avoiding policy errors.”

Key Takeaways:

• Fed maintains rates at 4.25%–4.50%
• No immediate plans to cut despite market speculation
• Concerns about inflation, unemployment, and tariffs dominate policy narrative
• Trade war impacts and consumer sentiment influencing economic trajectory

The Federal Reserve has projected up to two rate cuts later in 2025, contingent on how inflation and growth evolve in the months ahead.

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US Fed meeting, Jerome Powell, US interest rates, Fed rate decision, May 2025 Fed update, US economy, US inflation, Federal Reserve news, US GDP, Donald Trump tariffs, trade war impact, global markets, US monetary policy