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- US Federal Reserve maintains pause in rate cuts amid uncertainty over inflation and unemployment risks
US Federal Reserve maintains pause in rate cuts amid uncertainty over inflation and unemployment risks
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Policymakers at the US central bank voted unanimously to keep the key lending rate at 4.25% to 4.50%, citing uncertainty over the Trump administration's tariff policies. Fed Chair Jerome Powell expressed concern that the tariffs could lead to inflation and unemployment. The rate decision marks the third consecutive meeting where the Federal Reserve has left interest rates unchanged.
I think there's a great deal of uncertainty about, for example, where tariff policies are going to settle out and also when they do settle out, what will be the implications for the economy.
We are always going to consider only the economic data, the outlook, the balance of risks, and that's it.
We are well positioned to wait for greater clarity before considering any adjustments to our policy stance.
We may find ourselves in a challenging scenario in which our dual mandate goals are in tension.
It seems highly unlikely that the Fed will receive a clear enough signal to act by the June meeting, since the 90-day pause on 'reciprocal' tariffs lasts through 8 July.
The best course of action for the FOMC may simply be to wait for more clarity about trade policy and its implications for the US economy.
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