The Federal Reserve said Wednesday it is holding its benchmark interest rate steady, marking a continuation of its “wait-and-see” approach as it assesses the impact of the Trump administration’s economic policies.
By the numbers
The central bank on Wednesday said it will maintain the federal funds rate at its current range of 4.25% to 4.5%.
The rate has remained at that level since President Trump took office in January. The last time the Fed cut rates was in December 2024, when it trimmed rates by 0.25 percentage points.
The federal funds rate reflects the interest rate banks charge each other for short-term loans. A higher benchmark rate can make borrowing more expensive for businesses and consumers because it helps determine what businesses and consumers pay in interest on loans and credit card debt.
When the benchmark rate is lowered, loan rates tend to follow, making it less expensive to borrow money.
Last month, Fed Chair Jerome Powell said the central bank was monitoring whether the Trump administration’s tariffs could spur higher inflation, although he noted that the impact hadn’t yet materialized in hard economic data.
Mr. Trump has repeatedly called on the Fed to slash rates, including on Wednesday morning before the Fed announced its decision. During remarks to the press, Mr. Trump called out Fed Chair Jerome Powell, saying he’s “done a poor job.”
“We had the highest inflation we ever had and then it came down when I got elected,” he said. “Now we have a man who refuses to lower the Fed rate.”
What does the Fed say about the economy?
In determining rate cuts, the Fed’s goal is keep inflation low and maintain a healthy job market. In its announcement Wednesday, the central bank mentioned solid labor market conditions and an economy that continues to grow at a steady rate, although it also signaled caution.
“Uncertainty about the economic outlook has diminished but remains elevated,” the Fed wrote.
There has been speculation that Mr. Trump’s tariffs could drive up inflation, but so far it has remained in check. The Consumer Price Index rose slightly in May to 2.4%, up from 2.3% in April. The job market also continues to chug along, although some economists forecast that it could start to weaken in coming months.
Mary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at “60 Minutes,” CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program.
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