Research
May 07, 2025
Monetary Policy
Federal Reserve Maintains a Wait-and-See Posture on Interest Rates for Now
The Federal Open Market Committee (FOMC) held short-term interest rates steady at its May 6–7 meeting, as widely expected. The Federal Reserve cited continued economic strength, including solid growth and low unemployment, but also highlighted rising uncertainties tied to tariffs. As the statement noted, “The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.”
Given this backdrop, the FOMC signaled a more cautious approach to monetary policy in the months ahead. Officials indicated that future actions would depend on greater policy clarity and incoming data.
At its March meeting, the Fed’s median projections were consistent with two rate cuts in 2025. However, opinions among policymakers remain divided, and any reductions in the federal funds rate are unlikely in the near term. For now, the Federal Reserve remains in a wait-and-see posture as it waits for incoming data and greater policy certainty. Indeed, the FOMC is also likely to keep interest rates unchanged at its June 17–18 meeting.
For the restaurant industry, interest rates have a direct impact on borrowing costs, affecting expansion, renovations, and new initiatives. Lower rates would also ease consumer credit burdens, potentially boosting discretionary income and hospitality spending. While rates remain elevated for the time being, the FOMC’s signals suggest possible cuts later this year—developments that could spur investment and strengthen consumer demand in sectors reliant on confidence and spending, including eating and drinking places.
Given this backdrop, the FOMC signaled a more cautious approach to monetary policy in the months ahead. Officials indicated that future actions would depend on greater policy clarity and incoming data.
At its March meeting, the Fed’s median projections were consistent with two rate cuts in 2025. However, opinions among policymakers remain divided, and any reductions in the federal funds rate are unlikely in the near term. For now, the Federal Reserve remains in a wait-and-see posture as it waits for incoming data and greater policy certainty. Indeed, the FOMC is also likely to keep interest rates unchanged at its June 17–18 meeting.
For the restaurant industry, interest rates have a direct impact on borrowing costs, affecting expansion, renovations, and new initiatives. Lower rates would also ease consumer credit burdens, potentially boosting discretionary income and hospitality spending. While rates remain elevated for the time being, the FOMC’s signals suggest possible cuts later this year—developments that could spur investment and strengthen consumer demand in sectors reliant on confidence and spending, including eating and drinking places.