Federal Reserve Decision on Interest Rates Scheduled for Wednesday: Preview of Expected Outcomes.
The Federal Reserve Bank is expected to keep its benchmark rate steady at its meeting on Wednesday, maintaining the same laid-back stance it's had since the start of 2025. According to CME Group's FedWatch Tool, there's a 99.9% chance the Fed will keep the federal funds rate steady, hovering between 4.25% and 4.5%.
This rate has been at this level since December, a stance the Fed has maintained despite the uncertainty surrounding President Trump's tariffs. Trump, for his part, has been clamoring for the Federal Reserve Chairman, Jerome Powell, to lower interest rates, most recently following the release of May's job creation figures, which revealed a slowdown.
An unchanged rate would signal the Fed's ongoing caution as it tracks the impact of Trump's economic policies. As EY-Parthenon Chief Economist Gregory Daco noted, the Fed is adopting a "wait-and-see" approach, watching how the economic landscape unfolds under Trump's administration.
Consumer sentiment has improved somewhat, but the uncertainty brought on by the President's tariffs hasn't completely disappeared. The inflation rate increased slightly in May to 2.4%, compared to April's rate of 2.3%. Job growth is sluggish, but the labor market remains resilient, exceeding economists' expectations in May.
The Federal Open Market Committee will hold its next meeting on June 17-18, with the FOMC's decision being announced on June 18 at 2 p.m. EST. A divided decision would mark a departure from the unanimous vote in May, with some members expressing concerns about slowing growth. However, economists predict a 97.5% probability that the Fed will maintain its benchmark rate at the current range.
If the Fed does hold rates steady, borrowers might find this news less than desirable, but savers might be pleased, as they benefit from higher interest rates. Now could be the ideal time to shop for high-yield savings accounts or lock in CD rates, according to analysts. It could also be a good opportunity to pay off high-cost credit card debt and pad emergency savings.
Mary Cunningham is a MoneyWatch reporter. Before joining the business and finance vertical, she worked at "60 Minutes," ourNews.com, and our News 24/7 as part of the our News Associate Program.
- Jerome Powell
- Interest Rates
- Federal Reserve
- Federal Reserve Board
A Fed rate cut in the immediate future is highly unlikely, but there's some chance of cuts later in 2025, possibly starting as early as September. The Fed is exercising caution, interested in maintaining flexibility in case of an economic downturn. The data-dependent approach emphasizes stability, with only one or two cuts expected in 2025, aiming to keep economic conditions in check.
- Despite President Trump's persistent calls for a rate cut, Jerome Powell, the Federal Reserve Chairman, might maintain the current interest rates, as indicated by the Fed's ongoing caution and the 97.5% probability that the Fed will keep its benchmark rate at the current range.
- As the Federal Reserve Board adopts a "wait-and-see" approach, watchfully observing the economic landscape under President Trump's administration, there's a potential for interest rate cuts later in 2025, with a slight chance starting as early as September, demonstrating the Fed's interest in maintaining flexibility in case of an economic downturn.
