LAS VEGAS (KTNV) — The Federal Reserve voted June 18 to keep interest rates at its current of 4.25% to 4.5% range.
Since then, Federal Reserve Chairman Jerome Powell has explained their decision making and what leads into a decision like this.
WATCH | Fed Chairman Powell defends interest rate decision as Las Vegas residents struggle with prices
He spoke in front of Congress on Tuesday, and faces criticism by politicians, including President Donald Trump, who is calling for immediate cuts, according to the Associated Press.
While this decision may have surprised many in our valley, several economists who I spoke with tell me they saw it coming.
Principal Analyst at Applied Analysis Jeremy Aguero and UNLV Center for Business & Economic Research Director and Professor Stephen Miller told me interest rates are directly tied to unemployment and inflation.
Unemployment is at a low 4.2% nationally and inflation is low, too.
According to the U.S. Bureau of Labor of Statistics Consumer Price Index, in January inflation for all items was at 3%, but since then it has dropped to 2.3% in April and 2.4% in May.
April's inflation was the lowest in the U.S. since February 2021, according to the U.S. Bureau Labor of Statistics Consumer Price Index.
The economists tell me with both unemployment and inflation low, there's no reason to drop the interest rates. Despite the news, several locals tell me they're feeling the pinch and want relief now.
“My paycheck maybe doesn’t go as far as it used to," art teacher Stacy Hedrick said.
“A lot of sticker shock, a lot of sticker shock," said Gus Hawkins a 30-year Las Vegas resident.
I caught up with Hedrick and Hawkins at the store Tuesday.
“I stop at the grocery store a lot and buy a small amount of things but I’ve noticed that every time I go it’s at least $50 and that just adds up," Hedrick said.
High prices is a story we've all seen, so much so that Smith's and other stores are offering discounts across the board.
“I’m glad to see some of the stores are getting a clue," Hawkins said.
While inflation is low right now, Hawkins says you have to account for past years when calculating the increase in prices.
“Because it’s down 2% doesn’t mean that we don’t have all the hikes from the previous years," Hawkins said.
It just keeps costing more every year. Inflation is the percentage items increase in price compared to the year before. According to the U.S. Bureau of Labor of Statistics Consumer Price Index, prices are up in May 2025 by 2.4%.
The highest inflation percentage in 2024 was in March at 3.5%. In January of 2023, inflation was at 6.3%, and inflation was at 9.1% in June of 2022.
All of this adds up. This means a product in 2021 could've went up in price by around 21.3% from 2021 to 2025, depending on the product and exact rate for the industry.
If prices continue to add up, why did the Federal Reserve decide to stay the course? Chairman Powell told Congress that right now they want to wait and see.
“What will actually happen with rates is going to depend on the path of the economy and that’s highly uncertain," Powell said on Tuesday.
He attributes some of that uncertainty to tariffs, and Aguero agrees.
“The way the tariffs were originally outlined on liberation day and the way that tariffs exist today are wildly dissever to one another and so what the risk was then and what the risk is now is wildly different," Aguero said.
The Feds still expect to have two interest rate cuts this year. However, Aguero and Miller both tell me it depends on how tariffs, foreign affairs and other factors react on the economy.
They tell me unemployment or inflation would likely have to change before there is a change in the interest rates.
