The Federal Reserve has decided to keep interest rates steady for the fourth consecutive time. This decision, made during a meeting on Wednesday, maintains the key interest rate at around 4.3%, a level it has held since December.
In recent months, the U.S. has seen many changes in policies, but borrowing costs have remained stable. The Fed’s leaders are cautious and want more data on how tariffs and other policy shifts might impact prices and the economy before making any adjustments.
Typically, the Fed lowers rates when the economy shows signs of weakness and raises them when inflation is a concern. Currently, inflation is above the Fed’s target of 2%, standing at 2.4% as of May. Despite this, President Donald Trump has urged the Fed to cut rates, suggesting that economic problems have eased. He has criticized Fed Chair Jerome Powell, calling him "stupid" and questioning his leadership.
While the European Central Bank has reduced rates multiple times recently, the Fed has opted for a wait-and-see approach. Officials have emphasized that their decisions will be based on economic data, not political pressures.
In its latest announcement, the Fed noted that economic activity remains solid. The interest rate set by the Fed influences what banks charge for loans, affecting everything from mortgages to business loans. The current rate is significantly higher than it was during the years following the 2008 financial crisis but is about a percentage point lower than it was last year.
Overall, the Fed seems committed to a cautious strategy, balancing the need to control inflation while monitoring the potential impacts of ongoing trade policies.