Stocks drop as the Fed keeps interest rates flat

Federal Reserve officials shared on Wednesday that key benchmark interest rates would remain unchanged, at 4.25%–4.5% where they have been since December. The decision came after a two-day meeting of the Federal Open Market Committee, where members returned a 9-2 vote to keep the rate steady for the fifth meeting in a row.

The Fed rates started rising in early 2022 from 0.25% before peaking at 5.5% by mid-2023. After a year-long plateau, rates started dropping again last September but have remained the same since December 2024. The Dow Jones Industrial Average, which comprises 30 top U.S. stocks, dropped nearly 300 points after Federal Reserve Chairman Jerome Powell’s Wednesday press conference on the decision.

What did Powell say? Despite a rise in uncertainty, the economy is in a solid position, according to the Fed chairman. He cited low unemployment and a nearly saturated labor market but acknowledged somewhat elevated inflation. Officials have not made any decisions around rates for September 2025, Powell said about the group’s next scheduled meeting. Leaders will continue assessing possible changes against incoming data and evolving outlook, while balancing risks, he said.

Dig deeper: Read Lauren Canterberry’s report about the U.S. economy experiencing a second month of rising inflation this month.