The US Federal Reserve left its key policy rate unchanged for the fourth time in a row

The US Federal Reserve System (Fed) has kept the federal funds rate in the range of 4.25-4.5% per annum. This is stated in a statement by the Federal Open Market Committee (FOMC).

“Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated,” the regulator notes.

The FOMC aims to achieve maximum employment and inflation of 2% in the long term. Uncertainty about economic forecasts has decreased but remains elevated.

Federal Reserve Chairman Jerome Powell said that commodity price inflation will rise over the summer as Trump’s tariffs will be passed on to American consumers, who, according to him, will bear part of these costs.

«Ultimately, the cost of the tariff has to be paid, and some of it will fall on the end consumer. We know that because that’s what businesses say. That’s what the data say from the past,» he said.

The FOMC still plans two interest rate cuts for 2025, but when and if that happens depends on economic conditions.

In its latest reviews, the Fed raised its inflation forecast (PCE index) in the US for 2025 to 3% from 2.7% expected in March, and for 2026 to 2.4% from 2.2%. Core inflation will be 3.1% this year and 2.4% in 2026.

At the same time, the regulator has lowered its expectations for US GDP growth in 2025 to 1.4% from 1.7% and in 2026 to 1.6% from 1.8%.

Recall that most economists surveyed by Reuters share the view that the Federal Reserve will keep interest rates at current levels for at least several more months, as there are still risks of inflation resuming due to Donald Trump’s tariff policy. Experts have not reached a clear consensus on what the rate will be by the end of 2025, but about 80% believe it will be 3.75-4% or higher.