April 2025 FOMC Update

The Federal Reserve (Fed) left short-term interest rates unchanged at a target range of 4.25% to 4.50%. The Fed recognized an increase in uncertainty around its economic outlook and greater risks to both higher unemployment and higher inflation.

Current Conditions

Chair Powell noted the resilience of the U.S. economy heading into a period of uncertainty. Labor market imbalances have largely receded. Job openings are in line with the number of unemployed individuals, and wages are unlikely to be a source of inflation pressure. Underlying economic activity expanded at a steady pace in recent months despite the distortions brought about by a surge in imports ahead of changes in trade policy.

Forward Guidance

Powell repeated a theme used over his last several public appearances regarding forward guidance. The Fed is not in a hurry to reduce rates given the level of uncertainty and will require more data before committing to a path for policy. Powell viewed policy as “somewhat restrictive” but stopped short of confirming market projections for lower rates.

Policy/Market Reaction

The Fed delivered very little in the way of new information today given the uncertain situation surrounding trade policy. Stocks, bonds, and the Dollar were marginally improved following the release and press conference. Interest rate futures indicate a higher market implied probability of a rate cut at the next few meetings with July 30 now the most likely date for a move.