WASHINGTON — The Federal Reserve voted unanimously Wednesday to maintain the benchmark federal funds rate at 5.5% — a 23-year high — citing inflation that remains "elevated and persistent," according to the post-meeting statement.
The decision marks the seventh consecutive pause since the Fed's aggressive rate-hiking campaign began in March 2022. The central bank has now kept rates unchanged for 14 months.
"While inflation has eased substantially, it remains above our 2% target," Fed Chair Jerome Powell said during a press conference. "The committee needs greater confidence that inflation is moving sustainably toward 2% before considering rate reductions."
The personal consumption expenditures (PCE) price index, the Fed's preferred inflation gauge, rose 2.7% year-over-year in March — down from its 7.1% peak in June 2022 but still above target.
For consumers, the rate hold means continued high borrowing costs:
Loan Type Average Rate Monthly Payment on $10,000
Credit Card 21.5% $215 (interest only)
30-Year Mortgage 7.2% $68
Auto Loan (5-year) 8.4% $205
Personal Loan 12.1% $268
"This is a gut punch for anyone with variable-rate debt," said Mark Hamrick, senior economic analyst at Bankrate. "Every month rates stay high is another month of interest payments that could have gone toward principal."
The Fed's updated quarterly projections, released alongside the rate decision, show policymakers expect two rate cuts in 2025 — down from the four cuts projected in December. The median forecast for the federal funds rate at year-end is now 4.9%.
Wall Street reacted negatively. The S&P 500 fell 1.1%, while the Dow Jones Industrial Average dropped 320 points. Treasury yields rose, with the 10-year note climbing to 4.65%.
Economists at Goldman Sachs revised their first rate cut forecast from July to September. JPMorgan Chase now expects no cuts until November.
The Fed's next policy meeting is scheduled for June 17-18.