Takeaways from the Fed’s decision to keep rates on hold as officials watch Trump’s tariffs and Israel-Iran conflict
CNN
The Federal Reserve held interest rates steady again Wednesday as officials continue to wait for the fallout of President Donald Trump’s sweeping policy changes and tensions in the Middle East.
The Federal Reserve held interest rates steady again Wednesday as officials continue to wait for the fallout of President Donald Trump’s sweeping policy changes and tensions in the Middle East. The central bank left its benchmark lending rate unchanged at a range of 4.25% to 4.5%, where it has been since January. Economists widely expect Trump’s erratic trade war to push up prices and eventually cause unemployment to climb. So far, Trump’s tariffs have resulted in a surge of imports into the US, which has taken a toll on economic growth. However, inflation has been tame and the labor market remains in decent shape. Still, Fed officials don’t expect that to last: New economic projections show that officials expect unemployment to rise this year more than estimated in March — and for prices to pick up more than they previously thought. Fed Chair Jerome Powell said in his post-meeting news conference that he expects Trump’s tariffs to eventually translate into higher inflation, but said the extent remains unclear. That will need to become apparent in order for the Fed to lower borrowing costs again, Powell said. “We have to learn more about tariffs. I don’t know what the right way for us to react will be,” he told reporters. “I think it’s hard to know with any confidence how we should react until we see the size of the effects.” US stocks took a dive after Powell said it’s difficult for the Fed to forecast with any confidence what the precise impact of tariffs will be on prices.
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