Third FOMC Monetary Policy Meeting of 2025 Adjourned: United States Prime Rate Remains At 7.50%

United States Prime Rate

The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its third monetary policy meeting of 2025 and, in accordance with our latest forecast, has voted to leave the benchmark target range for the federal funds rate at 4.50% - 4.75% to 4.25% - 4.50%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) holds at 7.50%.

NB: U.S. Prime Rate = (The Fed Funds Target Rate + 3)

Here's a clip from today's FOMC press release (note text in bold):

"...Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has increased further. 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.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Neel Kashkari; Adriana D. Kugler; Alberto G. Musalem; and Christopher J. Waller. Neel Kashkari voted as an alternate member at this meeting..."

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 The United States Prime Rate was lowered to the current 7.50% on December 18, 2024.

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Odds Now At 95% (Very Likely) The U.S. Prime Rate Will Continue at 7.50% After the May 7, 2025 FOMC Monetary Policy Meeting

Prime Rate Prediction

Prime Rate Forecast

As of right now, our odds are at 95% (very likely) the Federal Open Market Committee (FOMC) of the Federal Reserve will vote to leave the benchmark target range for the fed funds rate (TRFFR) at 4.25% - 4.50% at the May 7^TH, 2025 monetary policy meeting, leaving the U.S. Prime Rate at the current 7.50%.

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Here's a quote from Fed Chair Jerome Powell from his April 4th speech at the Economic Club of Chicago...

“The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”

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Stay tuned...

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The United States Prime Rate was lowered to the current 7.50% on December 18, 2024.

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SUMMARY

• Current odds the U.S. Prime Rate will continue at the current 7.50% after the May 7^TH, 2025 FOMC monetary policy meeting: 95% (very likely.)

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Odds Now At 70% (Somewhat Likely) The U.S. Prime Rate Will Continue at 7.50% After the May 7, 2025 FOMC Monetary Policy Meeting

Prime Rate Prediction

Prime Rate Forecast

As of right now, our odds are at 70% (somewhat likely) the Federal Open Market Committee (FOMC) of the Federal Reserve will vote to leave the benchmark target range for the fed funds rate (TRFFR) at 4.25% - 4.50% at the May 7^TH, 2025 monetary policy meeting, leaving the U.S. Prime Rate at the current 7.50%.

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Tariff Worries

The NASDAQ Composite Index ended the week at 15,587.79, down 22.73% from its December 16, 2024 record-high of 20,173.89: 🐻 Bear market.📉

Meanwhile, the DJIA and S & P 500 Indexes slipped closer to bear-market territory; both ended the week in the correction zone.

Investors have responded to the current administration's expanding tariff war.

Some A+ insights from a recent Fortune.com article:

"...The biggest winners from the tariffs, [Ford CEO Jim Farley] suggested, won’t be domestic automakers but Asian rivals that would face little additional impact..."

"...With 25% increases in the cost of parts, inflation would surge in maintenance and repair and insurance, which vehicle owners are already struggling to handle..."

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• And here's a detailed "Tariff Timeline" compiled by the superlative folks at USA Today.
  

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DOGE Dismissals

Job cuts surged last month.

Total layoffs rose from a massive 172,017 cuts during February, to a whopping 275,240 during March of this year...😓

 

DOGE-related terminations were 216,670... ▽ CHARTS ▽

CHART: Job Cuts - March 2025 UPDATE
Copyright © 2025 Challenger, Gray and Christmas, Inc.

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CHART: Job Cuts by Reason - March 2025 UPDATE
Copyright © 2025 Challenger, Gray and Christmas, Inc.

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Stay tuned...

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The United States Prime Rate was lowered to the current 7.50% on December 18, 2024.

=======

SUMMARY

• Current odds the U.S. Prime Rate will continue at the current 7.50% after the May 7^TH, 2025 FOMC monetary policy meeting: 70% (somewhat likely.)

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