Fed keeps rates at current level, noting increasing risks of rising unemployment and inflation
Author: Christian Sandor | Edited by: Stephen Alpher Updated: May 7, 2025, 6:08 PM Published: May 7, 2025, 6:05 PM
As expected, the U.S. Federal Reserve on Wednesday kept its target range for the federal funds rate at 4.25%-4.50%, extending its pause in monetary easing for a third straight meeting.
“Uncertainty about the economic outlook has increased significantly,” the Fed said in a statement. “The Committee is closely considering risks from both sides of its dual mandate and believes that the likelihood of higher unemployment and higher inflation has increased.”
Bitcoin (BTC), which fell below $97,000 during the day, erasing gains made Tuesday night amid U.S.-China trade talks, traded at $96,600 shortly after the Fed’s decision.
The move comes as policymakers navigate a difficult macroeconomic environment amid the Trump administration’s global tariffs. Inflation remains above the 2% target, and questions abound about the impact of tariffs on consumer prices as the economy shows signs of slowing.
Market participants are forecasting three rate cuts this year, with July the most likely first rate-cutting meeting. But Fed officials have been vocal about the need to wait for more clarity on the impact of tariffs before making decisions on rate adjustments.
All eyes now turn to Powell’s upcoming speech at 2:30 p.m. ET (6:30 p.m. UTC), which could provide valuable clues about the Fed’s plans for the coming months.
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