The Federal Reserve Wednesday decided to hold interest rates right where they are.
And, despite nearly constant pressure from President Donald Trump, the Fed also indicated the cut he wants to badly is only likely to happen once this year.
The Fed held interest rates steady while projecting higher inflation, continuing unemployment and only a single rate cut for the year. All of that comes with escalating oil prices and the cost of the war in Iran.
New projections from U.S. central bank policymakers showed the Fed’s benchmark overnight interest rate would fall by just a quarter of a percentage point by the end of this year, according to a report from Reuters, with no indication when such a move might come. That view was unchanged from previous projections and remains out of step with Trump’s demand for a sharp drop in borrowing costs.
Inflation, as measured by the Fed’s preferred gauge, was expected to end the year at 2.7%, not far below its current rate and higher than the 2.4% projected in December, according to the Reuters report.
“Implications of developments in the Middle East for the U.S. economy are uncertain,” the Fed said in a policy statement that also noted ongoing stable unemployment.
The new rate and economic projections showed the Fed, for now, largely looking through the oil shock, with policymakers still expecting to lower rates this year and anticipating inflation to be 2.2% by the end of 2027, near the central bank’s 2% target.
Notably, no policymakers saw rates needing to move higher by the end of this year, though one official anticipated a rate increase in 2027.
