For the fifth straight meeting, the Federal Reserve kept its benchmark interest rate, the Federal Funds Rate, unchanged at 4.25%to 4.5%. This pause, in effect since January, was widely expected as the Fed continues to weigh concerns about both inflation and the job market. Notably, two Fed governors supported a small rate cut, the first time since 1993 that more than one governor dissented from the majority vote.
Keep in mind: The Fed Funds Rate is what banks charge each other for overnight loans. While it doesn’t directly determine mortgage or long-term loan rates, it influences borrowing costs across the economy.
What’s the bottom line? The Fed is trying to balance stable prices with strong employment – two goals that can sometimes pull in opposite directions. High inflation usually keeps the Fed from cutting rates, while economic slowdowns may push them to consider it. New tariffs have added greater uncertainty to that balance.
Looking ahead, the Fed will watch upcoming inflation and jobs data closely to help guide future rate decisions.