In recent months, Americans and businesses have faced a whirlwind of policy changes. But one thing remains fixed: the borrowing costs set by the US Central Bank.
The Fed adhered to the strategy on Wednesday, with the vote keeping its key interest rates unchanged.
The decision has been out of action for the fourth consecutive time, leaving the bank’s influence loan interest rate hovering around 4.3%, which has been around since December.
Bank leaders say they need more information on how fast tariffs and other policy changes are before the change moves forward, or the extent to which both.
Typically, if the Fed thinks the economy is struggling and if prices start to rise too quickly, it will lower the cost of borrowing.
Inflation is the rate at which prices rise, and still exceeds the Fed’s 2% target, with 2.4% in May.
But President Donald Trump has repeatedly called on the Fed to lower interest rates, partly because the problem has disappeared.
The Fed’s decision came ahead of Trump’s speech on Wednesday, repeating criticism of Fed Chairman Jerome Powell, calling him “stupid” and speculating on the end of his term.
The European Central Bank has lowered interest rates eight times since June last year. The Bank of England cut borrowing costs last month but is expected to remain stable this week.
Federal Reserve officials who have the power to make policies independent of the White House said they will make decisions based on the data.
The Fed’s interest rate decisions determine that it charges banks for short-term loans.
That speed, in turn, has a significant impact on the cost of borrowing across the economy, informing conventional banks that ultimately charge mortgages and other types of loans to households and businesses.
The Fed’s benchmark interest rate was 4.3%, significantly higher than the benchmark interest rate between 2008 and 2022, when the bank began to raise interest rates in response to price increases.
But that’s about one percentage point lower than last year’s percentage point.
