Why the Fed is expected to keep interest rates steady: Live updates

Bailey Schulz, USA TODAY

Wed, May 7, 2025, 5:03 AM 2 min read

Despite President Donald Trump pressing for lower interest rates, economists say the Federal Reserve will likely stick to its wait-and-see approach and hold rates steady on May 7.

The Fed will likely need more clarity before ending the pause, economists say. Economic signals so far this year have been mixed: job growth was robust in April and consumer spending growth was solid in the first quarter, but U.S. GDP shrank during the first three months this year amid trade policy uncertainty and inflation is still above the Fed’s 2% target. Economists are concerned tariffs could drive inflation higher and increase recession risks.

“While the possibility still exists for potential rate cuts later this year, the economic picture is complicated, and it's too early to know if or when those cuts might happen,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion, in a May 5 statement.

The Fed is set to announce its decision at 2 p.m. ET, following a two-day meeting. Follow along for live coverage.

Trump has repeatedly called on Fed Chair Jerome Powell to lower interest rates.

On April 21, Trump urged “preemptive” interest rate cuts, calling Powell “a major loser” and pushing him to lower interest rates "NOW.”

The following day, Trump told reporters he had “no intention of firing” Powell, but “I would like to see him being a little more active in terms of his idea to lower interest rates. This is a perfect time to lower interest rates.”

In recent months, Powell has said the Fed is independent and Trump can't fire him. “Not permitted under the law,” he said after the November Fed meeting.

– Bailey Schulz

The benchmark federal funds rate has been 4.25% to 4.5% since December, when the Fed announced a quarter percentage point drop. The Fed left rates unchanged during its January and March meetings.

– Bailey Schulz

The Federal Reserve began to hike interest rates in 2022 to combat rapid inflation, going from nearly zero in early 2022 to a two-decade high of 5.25% to 5.5% in July 2023. As inflation slowed, the Federal Reserve began to lower rates.

The Fed in December signaled rate cuts would move at a slower pace amid stubborn inflation. In March, the Fed held its prediction of two rate cuts in 2025, down from four envisioned in September.

– Bailey Schulz

This article originally appeared on USA TODAY: Federal Reserve expected to keep interest rates steady: Live updates