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The U.S. Federal Reserve has decided to keep interest rates unchanged in its July 2025 policy meeting. This is the seventh consecutive time the Fed has maintained its benchmark rate. Now, all eyes are on the September meeting, where a possible rate cut is being speculated.
Why Did the Fed Hold Rates?
- Inflation Is Easing:
Inflation in the U.S. is gradually coming under control. The Consumer Price Index (CPI) for June 2025 stood at 3.1%, slightly above the Fed’s 2% target, but showing significant improvement compared to previous months. - Stable Economy:
The unemployment rate is hovering around 4%, and GDP growth remains steady. This stability gave the Fed confidence to hold off on any rate changes.
What’s Next? – Focus on September
Fed Chairman Jerome Powell signaled that if inflation continues to decline in the coming months, there is a strong possibility of a rate cut in September. This decision will have a direct impact on financial markets and investor sentiment.
Impact on Markets
- Stock Markets Steady:
With no change in rates, the markets showed little volatility. Investors are now watching for major earnings results and the Fed’s next move in September. - Big Tech in Focus:
Earnings from major companies like Microsoft, Apple, Meta, and Amazon are due this week, which will influence the direction of the stock market.
What It Means for Investors
- FD and loan rates are likely to remain stable for now.
- Stock market volatility may reduce in the short term.
- It may be wise to wait for September before making major investment decisions.
Outcome:
The Fed’s decision shows a careful balancing act — keeping inflation in check while supporting economic growth. The next two months will be crucial. The economic data released before September will likely determine the Fed’s next move.
Sources: U.S. Federal Reserve official press release, Reuters, Bloomberg, and CNBC.
