THE U.S. Federal Reserve on Wednesday left the target range for the federal funds rate unchanged at 4.25 percent to 4.5 percent, as solid expansion of economic activity supports a wait-and-see mode.
This widely expected decision marked the fourth time that the Fed chose to keep the benchmark interest rates unchanged in a row.
The United States continues to have a low unemployment rate, a solid labor market and somewhat elevated inflation, according to the Fed. The Federal Open Market Committee will continue to monitor the implications of incoming information for the economic outlook, said the statement.
Notably, Federal Reserve Board members and Federal Reserve Bank presidents projected higher unemployment and inflation for 2025, 2026 and 2027 and adjusted lowered forecasts for U.S. economic growth in 2025 and 2026.
In particular, the median forecast for personal consumption expenditure inflation in 2025 rose to 3 percent, up from 2.7 percent at the previous monetary meeting, according to the Summary of Economic Projections issued on Wednesday.
The median forecast for the unemployment rate in 2025 increased by 0.1 percentage point to 4.5 percent, while unemployment in 2026 was expected to remain at 4.5 percent, higher than the earlier median forecast of 4.3 percent. The United States is projected to see economic growth of 1.4 percent in 2025, lower than the previous forecast of 1.7 percent, according to the Summary of Economic Projections.
Fed officials maintained their forecast for the federal fund rate for 2025 at 3.9 percent while their median forecasts of the benchmark interest rates for 2026 and 2027 rose 0.2 percentage points and 0.3 percentage points, respectively.
The latest forecast suggests that the Fed will have less room to cut rates amid persistent inflation pressures from higher tariffs and supply chain adjustments.
“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policies,” said Federal Reserve Chair Jerome Powell in a press conference on Wednesday afternoon.
“It takes some time for tariffs to work their way through the chain of distribution to the end consumer,” added Powell.
U.S. President Donald Trump on Wednesday again criticized Powell, hours before the Fed announced the latest monetary policy decision. Trump said he didn’t expect anything from the meeting and claimed he would do a “much better job” than Powell if he could appoint himself to the Fed.
Trump recently said he would soon announce his nominee to succeed Powell, whose term expires in May 2026. Trump himself appointed Powell as Fed chair in 2018.
Trump’s attack on Powell is “fine” as everyone is used to Trump saying all sorts of things, said Paul Sheard, economist and former vice chairman of S&P Global.
“I don’t think the Fed is gonna take any notice of that. The Fed will just do its job,” Sheard told Xinhua on Tuesday.
The danger would be if Trump puts somebody into that position but the Senate would be a check and balance in the process, according to Sheard, who is the author of The Power of Money: How Governments and Banks Create Money and Help Us All Prosper.
“Trump obviously wants to replace Powell... I don’t think he’ll try to sack him. He’ll wait,” Sheard added. / Xinhua