Fed-funds futures on Tuesday morning showed traders anticipate the Federal Reserve may keep its benchmark interest rate steady at its next two policy meetings and then potentially reduce it in September.

The Federal Reserve has decided not to lower interest rates this month, leaving uncertainty about any potential rate cuts later this year.

The Federal Reserve is expected to maintain its short-term interest rate, resisting political pressures from President Trump and Secretary Bessent to cut rates. Trump asserts there's no inflation, but grocery prices have risen.

A resilient labour market gives the Fed room to maintain higher rates, even as inflation continues to show signs of softening.

“Today’s data doesn’t move the needle much for the Fed’s decision-making,” Caldwell says. He expects the first rate cut to come in July. Bond market futures data shows 63% odds that the ...

While mortgage rates have fallen, they remain well above the rates enjoyed by most current homeowners, who may be reluctant to put their homes on the market and risk a much higher rate on their next mortgage. In turn, the market could continue to suffer from a lack of supply, making options limited and prices sticky.

Even so, the Fed will almost certainly leave its key rate unchanged at about 4.3% when it meets Tuesday and Wednesday. Powell and many of the other 18 officials that sit on the Fed’s rate-setting committee have said they want to see how Trump’s tariffs affect the economy before making any moves.

On a YoY basis, headline inflation slowed to 2.3%, also missing expectations of 2.4%. Core CPI, which strips out food and energy, rose by 0.2% (MoM), below the 0.3% estimate, though marginally above the 0.1% reading from the prior month. On an annual basis, core CPI remained stable at 2.8%, in line with forecasts.

April's tame inflation figure will serve as a “welcome reprieve” for the Federal Reserve, however, larger tariff-related price adjustments are likely to emerge over the next few months, said Alexandra Wilson-Elizondo, partner and global co-head and co-chief investment officer of multi-asset solutions within Goldman Sachs Asset Management.

WASHINGTON (AP) — The Federal Reserve kept its key interest rate unchanged Wednesday, brushing off President Donald Trump’s demands to lower borrowing costs, and said that the risks of higher unemployment and higher inflation have risen.