Fed Holds Rates Steady – But Stays Cautious on Future Cuts

No surprise moves, but no green light for rate cuts yet either

At its July 2930 meeting, the US Federal Reserve kept interest rates unchanged at 4.25%-4.50%. That’s the same level it’s held since earlier this year, and Fed Chair Jerome Powell made it clear they’re not rushing into any rate cuts just yet.

So, what’s going on? In short, inflation is cooling, but it’s not low enough. The Fed says growth has “moderated” and inflation is still “somewhat elevated.” Unemployment remains near historic lows, so the economy seems stable for now – but policymakers aren’t ready to declare the inflation fight over.

Markets didn’t react too dramatically. Stocks slipped slightly after the announcement, and bond yields rose a bit, with the 10-year Treasury hitting around 4.37%. The US dollar also gained about 1%, as investors took the message that rates could stay high for longer.

What does this mean for the rest of us? For now, borrowing stays expensive. Mortgage rates are still around 6.7%, and credit card or car loan rates aren’t likely to drop until the Fed makes its first actual cut. On the flip side, savers continue to benefit from strong returns on high-yield accounts.

Globally, the Fed’s pause adds more strength to the dollar, which can pressure emerging markets that rely on US funding. A strong dollar also makes dollar-denominated debt harder to repay abroad.

Bottom line? The Fed is staying cautious. There’s no rush to cut, and Powell made it clear they’ll be watching the data closely. If inflation continues to ease and growth holds up, we could see rate cuts later this year, but don’t count on anything just yet.