On May 7, 2025, the Federal Reserve held its benchmark interest rate steady at 4.25%-4.50% amid growing economic uncertainty. Fed Chair Jerome Powell highlighted that both inflation and unemployment risks have increased, largely due to the unresolved impact of President Trump's tariffs.

While the economy continues to grow and jobs are still being added, Powell acknowledged that it is unclear whether this momentum can be sustained. Businesses and households are delaying decisions, and underlying demand may be weakening, raising concerns about future economic data.

The Fed emphasized a "wait-and-see" approach, signaling it would adjust policy only once there is more clarity. Financial markets reacted positively to the Fed’s decision, with stock prices rising and Treasury yields falling. For now, the central bank remains in a holding pattern, with future moves dependent on how inflation and employment trends evolve.