Fed Holds Rates Steady at May 2025 Meeting—Traders Yawn, Banks Pocket Spreads

The Federal Reserve left interest rates unchanged in May 2025, marking the seventh consecutive ’wait-and-see’ meeting since inflation peaked. Powell & Co. continue playing monetary Jenga—removing one supporting block at a time without crashing the economy.

Market reaction? A collective shrug. Bitcoin barely budged, while traditional finance quietly celebrated another quarter of risk-free profits on inflated net interest margins.

Here’s what’s really happening: The Fed’s trapped between sticky 3.2% core inflation and an election-year unemployment rate. Every pause gifts Wall Street another $4B in free carry trade money—paid for by your shrinking savings account yield.

Pro tip: When central bankers stand still, it’s time to move. DeFi yields still beat treasuries 5:1. Just saying.

Federal Reserve Defies Trump’s Wishes, Keeps Interest Rates Unchanged

Over the last two months, the standoff between Fed Chair Jerome Powell and US President Donald Trump has been a vital story. In late April, the president was reportedly exploring whether he had the power to fire the chairman from his position. That turn of events saw the market plummet amid increased economic uncertainty.

Trump would walk back the statement, ensuring he would not fire Powell. Yet, the warning was clearly given, and his hopes for the central bank’s decision were clear. Now, it is clear they are not living and dying by those wishes, as the Federal Reserve has decided to leave interest rates unchanged in May 2025.

The rate remains at 4.25% to 4.5% despite pressure from the Oval Office. Indeed, they have remained committed to observing the continued effects of the administration’s ‘Liberation Day’ tariff plan. There was a chance they could cut rates on the heels of job growth being reported in April.

The data showed that the tariff plan had yet to impact hiring, as some feared. Still, Powell has remained concerned that the import tax increase would cause a “stagflation” effect. That takes place when inflation rises and the economy slows.

This decision gives the Fed more time to assess the impact of the tariffs on consumer sentiment and behavior. Specifically, some experts have projected that the true impact on the economy wouldn’t be felt till May concludes. If that is true, it should only inform their decision on interest rates in June.