The Federal Reserve has decided to keep its benchmark interest rate steady, maintaining the current range of 4.25% to 4.50%. The central bank pointed to strong economic growth, low unemployment, and persistent inflation as the reasons for its decision.
Economic Growth Continues, but Risks Are Rising
In a statement released by the Federal Open Market Committee (FOMC), the Fed noted that economic activity is expanding at a solid pace. The job market remains robust, and inflation is still “somewhat elevated.”
However, the Fed flagged rising uncertainty. Officials warned that both inflation and unemployment risks have increased, suggesting that the outlook isn’t entirely stable.
Fed Reaffirms Balance Sheet Reduction
Alongside holding rates, the Fed confirmed it will continue reducing its balance sheet. This includes the ongoing runoff of Treasury securities and mortgage-backed assets, in line with its tightening strategy.
Back in March, the Fed already announced a slowdown in balance sheet trimming. Starting in June, redemptions of Treasury securities will be capped at $5 billion per month, while the cap for mortgage-backed securities will remain at $35 billion.
No Immediate Rate Changes, But Data Will Guide Future Moves
While the Fed didn’t hint at a rate hike or cut anytime soon, it emphasized that future policy decisions will be data-driven. Fed Chair Jerome Powell said inflation trends are moving in the right direction but added that the effects of new tariffs are still unclear.
He reiterated that the Fed is ready to respond swiftly to economic shifts, though any changes will depend on how the situation evolves.
Bitcoin Reacts to Fed Decision
Around the time of the announcement, Bitcoin showed some volatility. The price hovered just above $96,000, reflecting investor uncertainty in the wake of the Fed’s neutral stance.
Fed Remains Focused on Long-Term Goals
The central bank closed its statement by reaffirming its long-term commitment to maximum employment and 2% inflation. It also made clear that it’s ready to adjust policy if new risks emerge that threaten these goals.
All committee members supported the decision, including Neel Kashkari, who participated as an alternate.