Fed Holds Rates Steady at 3.5%–3.75% as Inflation Persists
The Federal Reserve left interest rates unchanged on June 17, keeping its benchmark federal funds rate at 3.5% to 3.75%.
The unanimous 12-0 decision reaffirmed the Fed’s dual mandate of maximum employment and stable prices and reaffirmed their policy of maintaining “ample reserves” in the banking system.
The decision extends a holding pattern that began after the Fed’s last rate cut in late 2025, leaving borrowing costs at their current level for the fourth consecutive policy meeting.
“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” the press release said. “Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.
“Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy.”
Inflation remains above the Fed’s 2% target, which officials partly attribute to supply shocks, including higher energy prices. Recent projections released alongside the meeting suggest officials do not expect rate cuts in 2026 and still see the longer‑run policy rate settling around just above 3%.
The June meeting was the first chaired by Kevin Warsh, who took over the helm of the Federal Reserve after Jerome Powell’s term ended in May.
