Federal Reserve leaves key interest rate unchanged for fifth straight meeting

The Federal Reserve announced on Wednesday that it will leave the standard interest rate unchanged, as policy makers decided to retain rates amid high economic uncertainty as they continue to monitor inflationary pressures and labor market data.

The Central Bank’s decision leaves the standard federal funds in the range of 4.25 % to 4.5 %, as it remained after the Federal Reserve Policy meetings this year. The central bank reduced interest rates in its last three meetings in 2024, including reduced 50 Basia in September and a 25-Basis discounts in November and December.

In its announcement, “modern indicators indicate that the growth of moderate economic activity in the first half of the year. The unemployment rate is still low, and that the conditions of labor market are still somewhat high.”

FOMC 9-2 voted to leave the prices unchanged, with the opposition of the governors of the Federal Reserve Michelle Bowman and Kristover and Warr from the decision on the basis that they were 25 points to reduce the federal funds rate. One of the conservatives was absent and did not vote at this meeting. This was the first time since 1993 that two FOMC members opposed a modified decision.

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The President of the Federal Reserve, Jerome Powell, spoke at a press conference in the wake of the decision and said that the central bank focuses on the double mandate objectives of the maximum employment and stable prices, noting that “despite the high uncertainty, the economy is in a strong position.”

He pointed out that despite today’s report that the gross domestic product in the second quarter has grown at an annual rate of 3 %, the growth of the economy in the first half of 2025 was closed to 1.2 % when it represented a decrease of 0.5 % in the first quarter.

Powell added that the data indicates that the labor market “is” widely in balance and is in line with the maximum employment “, and while inflation declined from its highest levels in 2022, it is still high for the goal of the Federal Reserve of 2 %.

“The changes in government policies are still developing, and their effects on the economy remain unconfirmed. The high definitions began to appear through the prices of some goods more clearly, but their total effects on economic activity and inflation still can be seen,” Powell explained.

He added: “There is a reasonable essential condition that the effects of inflation can be short -term, which reflects a single -time shift in the price level. But it is also possible that the inflationary effects are more stable, and this is a danger to the evaluation and its management.” “Our commitment is to maintain long -term inflation expectations, and prevent the price level for one time in the price level from the continuous inflation problem.”

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President Trump was nominated as head of the Federal Reserve lecture in 2017, although he has repeatedly criticized the years. (Saul Loeb / AFP via Getty Images / Getty Images)

Powell was asked about whether the central bank weighs interest rates in September, as politics will have two other rounds of inflation and labor market data before their next meeting. He answered by noting that FOMC will take this data under study, although not making decisions on future interest rate movements and stressed that the Federal Reserve does not do so in advance.

When asked if the recently announced commercial deals in the Trump administration have added certainty, Powell acknowledged that “a very dynamic time for commercial negotiations” but “we are still far from seeing the place where things settle” because “there are” many uncertainty for a solution. “

The opponents by two conservatives who feed, Bowman and Waller, were the subject of a question posed to Powell, who said: “What you want from everyone, and also from the dissident, is a clear explanation for what you think and what the arguments you offer, and this is what we had today.”

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Powell presented a question about whether September provides policy makers enough time to judge the effects of definitions on inflation data, and whether the cost of import taxes is transferred to consumers.

“The evidence is often not paid – only somewhat paid – through exporters who are less than their price, companies or retailers, individuals and institutions that deal with the source, and most of this is currently pushing … it has begun to appear in consumer prices, as you know in the June report. We expect to see more.”

“We know from investigative studies that companies feel that they have every intention to put this matter to the consumer. But the truth is, they may not be able to do so in many cases, so we will only have to watch and learn experimentally and learn how much this time period,” he explained.

Building on the Marriner S. Eccles Federral Reserve in Washington, DC, the United States, on Thursday, July 17, 2025. (Samuel Corome / Bloomberg via Getti Embron / Tire)

Edward Lawrence of the Fox Business Network asked about the impact of monetary policy on the Federal Reserve on the housing market, which slowed down amid high mortgage rates and narrow supplies.

Powell replied, “Housing is a special issue.” “We do not put mortgage rates at the Federal Reserve, as we have put average overnight, and the rates that enter real estate loans are long-term rates such as treasury rates-may be 30 years, and may be shorter than that-but not the federal federal reserve rate. We have no effect, but we are not the main effect.”

“There are other things that occur in the housing sector, one of which is just a kind of lack of housing in our long -term housing. We haven’t built enough housing. This is not something that the Federal Reserve can help and this will be the case even after the normalization of things, so I think the best thing we can do for housing is inflation 2 % and the maximum,” he explained.

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Powell was also asked about President Donald Trump’s efforts to pressure Powell and Federal Reserve Studies to reduce interest rates and whether his criticism is at risk of undermining the independence of the central bank to move forward.

“I will only say that I think the presence of an independent central bank was an institutional arrangement that has served the audience well, and as long as it serves the audience well, it should continue and be respected.” “If the audience does not serve well, it should not be something that we should defend automatically.”

“What gives us and has other central banks … is the ability to make these very difficult decisions in ways that focus on advanced data and expectations, the balance of risk, all the things we are talking about, not political factors,” he said.

“Governments all over the developed economist have chosen to put a little distance between direct political control over those decisions and decision makers. If you do not have that, this will be a great temptation, of course, using interest rates to influence the elections, for example, and this is something we do not want to do,” Powell explained. “I think this is widely understood, and certainly it is in congress, and I mean I think it is very important, I would like it.”

President Donald Trump became the fourth president who visited the federal reserve last week, when he met Powell at the site of renewing the headquarters of the Central Bank. (Reuters / Kent Nishimura / Reuters)

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FOMC will hold its next meeting on September 16 and 17, when price cuts can occur – although the market view of the possibility of a reduction at that time has decreased since the Federal Reserve decision on Wednesday.

“The price committee has spent the stage to take action at the next meeting,” said Jeffrey Roche, the chief financial economist at LPL. “If the economic conditions are weakened, the committee is likely to reduce prices by a quarter of a point in September.”

“The two opposing people were well, but they are definitely two interesting attention in light of the strong, continuous economic data and the strong profit season, indicating that at least two members of the committee may be ready to stop the approach to the dependency of data on the side,” said Sima Shah, the world’s chief strategic expert in the management of the main assets at least.

Shah added: “Moreover, the slightly diligent statement indicates that Waller’s concerns about the weakness of the basic labor market may gain more traction between the committee. It seems that the possibilities are slowly gathering in favor of September discount, but ultimately the incoming job data and inflation prints are still the ones that still carry the key.”

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The market’s reaction to the FOMC advertisement and Powell’s comments indicated that the reduction in the interest rate in September is less likely. The CME Fedwatch tool showed the possibility of prices at its current level from 35.4 % a day ago to 51.8 % after the announcement, with a decrease in the probability of 25-basis reduced from 63.3 % to 47.3 % today.