Are You Following the Interest Rate Debate?

The verdict is in: the Federal Reserve has decided to hold interest rates steady, despite mounting pressures to lower them. Fed Chair Jerome Powell made it clear that the central bank is standing firm and not rushing into any decisions, especially as it monitors the impact of newly implemented tariffs.

In a unanimous vote, policymakers chose to keep the Fed’s benchmark interest rate in the range of 4.25% to 4.5%. While acknowledging an increasingly uncertain economic outlook, the Fed maintains that the economy and labor market remain strong right now. Adding to uncertainty, the economy has contracted for the first time in three years according to a GDP report over the first quarter.

There’s also growing concern about a potential clash of the Fed’s dual mandates: price stability and maximum employment. These two goals typically align, but Powell has raised concerns that they may soon clash, which would force the Fed to choose which goal to prioritize.