Fed Holds Interest Rates Steady as Economic Projections Reflect Uncertainty Amid Trump’s Policies
The Federal Reserve is expected to maintain its policy interest rates in the 4.25%-4.50% range, while releasing new economic projections. These projections will reveal the Fed’s outlook on growth, inflation, and the impact of President Donald Trump’s policies, including tariffs and trade restrictions. The central bank’s policy statement will be followed by a press conference from Fed Chair Jerome Powell, offering further insight into the economic landscape.
Policymakers will address the potential effects of the Trump administration’s actions on the U.S. economy, such as tariffs on imports and changes to immigration policies. While the Fed had previously anticipated gradual rate cuts as inflation slowed, there is increasing concern over the impact of trade disruptions, especially with China and other U.S. trading partners. A recent poll indicated growing recession risks, reflected in weakened business and consumer confidence.
Despite a recent uptick in unemployment and moderate job growth, the full effects of Trump’s policies have yet to show significant impact on key economic indicators. The Fed’s new projections will include updated year-end forecasts on growth, unemployment, inflation, and the policy interest rate. Market expectations align with a potential rate cut of two quarter-percentage points by the end of the year, but the situation remains complex due to uncertainties surrounding Trump’s tariff plans and other policy decisions.
The Fed is cautious about the potential long-term consequences of Trump’s trade policies, especially tariffs. Economists warn that these measures could lead to slower growth and higher inflation. Although the Fed typically focuses on inflation and unemployment, the central bank’s projections may reflect an increased awareness of the broader risks posed by the administration’s economic strategy, particularly if rising tariffs negatively impact both employment and prices.
source: reuters