The Federal Reserve’s decision to hold its key interest rate steady at 4.25% to 4.5% for the third consecutive meeting isn’t a sign of stability. It’s a flashing red light of indecision. Fed Chair Jerome Powell all but admitted it: “it’s not a situation where [we] can be pre-emptive.” Translation? The Fed is flying blind, waiting for more data before making its next move. Powell even acknowledged that uncertainty is “extremely elevated and the downside risks have increased.” The truth is clear: the Fed is stuck, scared of making the wrong move while Americans are left paying the price.¹

The Balancing Act: Inflation vs. Employment

This indecision exposes a bigger problem: the Fed’s constant struggle to balance its two main mandates, full employment and price stability. After jacking up rates to a two-decade high in 2022 and 2023 to combat inflation, the Fed finally hit the brakes. Easing rates by a percentage point last year to around 4.3%. Since December 2024, the funds rate hasn’t budged, leaving the economy in a holding pattern with no clear direction.

Meanwhile, holdover inflation from the last administration still has a tough grip to break. Prices climbed 2.4% over the last year. Forecasts now predict it could break 3% by late 2025 and even hit 4% by mid-2026. For all the Fed's efforts to cool inflation, Americans aren’t feeling it. Wages are stagnant, and the cost of living keeps climbing.^2,3

The labor market? It’s holding on, but just barely. In April, just 177,000 jobs were added, far below expectations. Private sector growth was even worse, adding only 62,000 jobs. The unemployment rate might still be 4.2%, but cracks are beginning to show. Some economists warn that the labor market is heading for a fall and slowing wage growth isn’t going to be the inflation cushion the Fed is betting on.⁴

A Growing Threat of Stagflation

Stagflation, a nightmare mix of stagnant growth, rising unemployment, and persistent inflation, is no longer just a relic of the 1970s. It’s creeping back, and the Fed seems unprepared. The S&P 500 dipped after the Fed’s announcement. The markets aren’t buying Powell’s optimism. History tells us that stagflation crushes stock value, shreds fixed-income investments, and hammers businesses that rely on imports. If Powell waits too long to act, we’re staring down the barrel of an economic spiral.

The Risk of Mistiming Rate Cuts

The Fed’s pause strategy assumes it can outmaneuver market shifts in real-time. But that’s wishful thinking. “The longer they’re on hold, the more they’re passively tightening,” said George Goncalves, head of U.S. macro strategy at MUFG. Waiting until July or September to cut rates could back the Fed into a corner, forcing larger, more abrupt adjustments. “That’s just too long of a wait. You might lose that chance of really catching the economy,” he added. The Fed’s window for action is closing fast, and Powell’s strategy of delay could lead to economic whiplash.⁵

Gold Shines Amid Uncertainty

When the Fed stumbles, gold shines. Investors aren’t waiting around for Powell to make up his mind. Physical gold, real, tangible wealth, is proving its worth once again. Prices dipped slightly after the Fed’s decision but held strong near all-time highs, hovering around $3,380–$3,400 per ounce. It’s not just weathering the storm; it’s thriving in it.

The logic is simple: when rates hold steady or fall, the opportunity cost of holding gold drops. Add in the looming threat of stagflation, geopolitical tensions, and global supply chain disruptions, and gold’s safe-haven appeal only grows stronger. Central banks are scooping up gold at record levels, and futures markets saw an 8% jump in open interest after the Fed’s latest move.⁶

Protect Your Wealth

The Federal Reserve is stuck in a game of wait-and-see. If they mistime their rate cuts, the economy could pay a steep price. Inflation may surge back, unemployment could spike, and markets could stagnate. All while the Fed scrambles to catch up. In times like these, physical gold isn’t just a hedge; it’s real money. It protected wealth during the 1970s stagflation crisis, and it’s doing it again now.

A Gold IRA offers long-term protection from economic uncertainty. To learn more about securing your financial future, you can call American Hartford Gold today at 800-462-0071.

_______________
Max Baecker is the President of American Hartford Gold (AHG), the nation’s largest retailer of precious metals. He leads American Hartford Gold’s mission to help clients achieve long-term financial security with physical gold and silver.

Under his guidance, American Hartford Gold has delivered billions of dollars’ worth of precious metals to thousands of satisfied clients.

Max's dedication to upholding American Hartford Gold's industry-leading standards is reflected in its accolades. American Hartford Gold has made numerous high-ranking appearances on the prestigious Inc. 5000 List of America’s Fastest-Growing Private Companies. AHG holds an A+ Rating from the BBB and a 5-Star Rating on Trustpilot from thousands of American Hartford Gold reviews. American Hartford Gold is the only precious metals company trusted and recommended by Bill O’Reilly.

AHG offers investment-grade gold and silver coins and bars at competitive prices. Clients also benefit from its buy-back commitment with no back-end fees. To learn more, visit American Hartford Gold.

Notes:

1. https://www.investors.com/news/economy/federal-reserve-meeting-jerome-powell-trump-tariffs-sp-500/

2. https://www.bls.gov/news.release/cpi.nr0.htm

3. https://www.cbo.gov/publication/59863

4. https://www.foxbusiness.com/economy/us-jobs-report-april-2025

5. https://www.wsj.com/economy/central-banking/fed-keeps-rates-steady-as-tariff-uncertainty-roils-outlook-55ebe99f

6. https://www.wsj.com/finance/commodities-futures/gold-edges-higher-amid-losses-in-u-s-stock-futures-5448d827