US Fed holds rates, slows projected pace of future cuts
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The news: The Federal Reserve held interest rates steady at 4.25% to 4.5% and reaffirmed expectations for two cuts later this year, but signalled a slower pace of easing in 2026 and 2027.
The numbers: The new 2025 projections show core inflation rising to 3.1%, up from 2.8% in March, unemployment increasing to 4.5% from 4.4%, and GDP growth slowing to 1.4% from a previous forecast of 1.7%.
In its statement, the Fed said “uncertainty about the economic outlook has diminished but remains elevated.”
The context: While the Federal Reserve maintained its projection for two rate cuts in 2025 (totalling 50 basis points), it slowed the overall pace of future cuts, reducing projections for 2026 and 2027 to just one quarter-point cut each, down from two in each year previously.
US President Donald Trump, who earlier in the day called for cuts of up to 2.5 percentage points, pre-emptively blasted the decision and called Chair Jerome Powell “a stupid person.”
The sources: US Federal Reserve, US Federal Reserve - economic projections
