WASHINGTON, DC—The Federal Reserve on Wednesday maintained its benchmark interest rate, signaling two potential rate reductions later this year despite revised projections for higher inflation and slower economic growth.
The Federal Open Market Committee (FOMC) kept its key borrowing rate targeted in a range between 4.25% and 4.5%, a level it has held since December. Markets had widely anticipated no change in rates this week.
In its closely watched “dot plot” — which indicates individual FOMC members’ interest rate expectations — the committee continued to point to two rate cuts by the end of 2025, according to CNBC. However, it trimmed one cut from both its 2026 and 2027 outlooks, now anticipating a total of four cuts, or a full percentage point reduction, by 2027.
The dot plot also revealed continued divergence among Fed officials regarding future rate paths, with seven of 19 participants indicating a desire for no cuts this year, up from four in March. Despite this, the committee’s policy statement was approved unanimously.
Federal Reserve Chairman Jerome Powell is expected to offer more details during his 2:30 p.m. EDT news conference. U.S. stocks maintained earlier gains following the announcement.
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