Fed Keeps Rates Unchanged, But Keeps Two Cuts In Sight For 2025

The FOMC noted that uncertainty surrounding the economic outlook has remained elevated, although it has diminished from its previous forecast.
 Federal Reserve Chairman Jerome Powell delivers remarks at a news conference on March 19, 2025 in Washington, DC. (Photo by Kevin Dietsch/Getty Images)
Federal Reserve Chairman Jerome Powell delivers remarks at a news conference on March 19, 2025 in Washington, DC. (Photo by Kevin Dietsch/Getty Images)
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Rounak Jain·Stocktwits
Updated Jul 02, 2025 | 8:31 PM GMT-04
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The Federal Reserve on Wednesday kept the key borrowing rates unchanged, maintaining them in the 4.25% to 4.5% range, in line with market expectations.

The Federal Open Market Committee (FOMC), led by Jerome Powell, said it still expects two rate cuts in 2025.

The FOMC noted that uncertainty surrounding the economic outlook has remained elevated, although it has diminished from its previous forecast.

“Uncertainty about the economic outlook has diminished but remains elevated. The Committee is attentive to the risks to both sides of its dual mandate,” it said.

Following the Federal Reserve’s decision, benchmark indices continued to trade in the green.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.21%, while the Invesco QQQ Trust (QQQ) gained 0.14%.

According to the dot plot rate projections, 10 of the 19 policymakers expect the central bank to cut rates at least twice in 2025. Previously, 11 officials had factored in at least two rate cuts. Seven officials see no rate cut at all, up from four in March.

Neil Dutta at Renaissance Macro told Bloomberg that the Fed leaving the rates unchanged is not a big deal.

“I keep seeing people saying how dovish the Fed is -- they revised up unemployment by a tenth and revise up core inflation by three-tenths. If you still those forecast changes into a standard Taylor Rule guess what happens? Nothing,” said Dutta.

The FOMC’s projections also indicate stagflationary pressures on the economy, with inflation expected to reach 3% in 2025, while the gross domestic product (GDP) is projected to grow at just 1.4%.

Earlier in the day, U.S. President Donald Trump resumed his public criticism of Powell, calling him “stupid,” while demanding a 200-basis-point cut.

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