Fed likely to hold rates steady amid inflation rise

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1–2 minutes

Summary

Rising inflation and stable employment have led economists to expect no Fed rate cut at this week’s meeting.

Why this matters

Federal Reserve rate decisions affect borrowing costs, savings returns, and inflation across the economy. For consumers and businesses, a decision to hold rates signals policymakers remain focused on containing price growth.

Economists do not expect the Federal Reserve to cut interest rates at its meeting this week, as inflation has risen and the labor market has remained stable.

Federal Reserve policymakers were meeting Tuesday and Wednesday, with a decision due Wednesday afternoon. The meeting is the first under Chair Kevin Warsh, who replaced Jerome Powell. Powell remained one of the 12 members of the Federal Open Market Committee, which sets the benchmark interest rate.

The Fed has a dual mandate of price stability and maximum employment. Inflation has become a more immediate concern.

At the same time, job growth exceeded expectations and unemployment remained low. The unemployment rate was 4.3% in May for a third straight month, after staying between 4% and 4.5% for nearly two years.

The Fed raised rates 11 times starting in early 2022 to address inflation. The benchmark rate later fell after six cuts between late 2024 and late 2025 and now stands at 3.5% to 3.75%.

Goldman Sachs and J.P. Morgan said last week they did not expect rate changes for the rest of this year. Goldman Sachs forecast two cuts next year, while J.P. Morgan projected one rate increase in late 2027.

President Donald Trump has repeatedly called for lower rates.

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