Fed May Meeting: Did Markets Tune Out Powell’s Playbook?

Quick Take: Fed Holds Steady Amid Crosscurrents

On May 7, 2025, the Federal Reserve kept its benchmark rate at 4.25%–4.50% for the third straight meeting. Chair Jerome Powell struck a cautious tone, warning of elevated risks on both inflation and employment fronts, especially as recent tariff hikes cloud the outlook. Despite a mild 0.3% GDP dip in Q1, the labor market flexed its muscle with payroll gains topping forecasts in April. Powell stressed that while the economy stands on solid ground, the Fed prefers “clearer signals” before making its next move. Markets, however, may already be pricing in a July rate cut—assuming incoming data play ball.