Federal Reserve officials anticipate worsening inflation in the near future but maintain their projection of two interest rate cuts by the end of the year. Despite the solid pace of economic expansion, the Fed decided to keep its key rate unchanged for the fourth consecutive meeting. The central bank’s latest quarterly projections indicate weaker growth, higher inflation, and slightly higher unemployment by year-end compared to previous forecasts. Concerns over President Trump’s tariffs affecting prices led the Fed to delay any rate adjustments until the impact becomes clearer.

Fed policymakers foresee inflation rising to 3% by year-end and expect a rise in the unemployment rate to 4.5%. Economic growth is projected to slow to 1.4% this year. While some policymakers worry about tariff-induced price hikes, inflation has remained subdued so far this year. Fed Chair Jerome Powell emphasized the need to be forward-looking in light of potential inflationary pressures.

President Trump has criticized the Fed for not cutting rates, citing mild inflation figures. Powell reiterated the importance of patience, given the current strength of the economy. Trump’s focus has shifted to reducing the government’s borrowing costs, prompting calls for rate cuts. Despite global rate reductions, the Fed remains cautious, prioritizing stable prices and maximum employment.

While other central banks have lowered rates due to U.S. tariffs impacting their economies, the U.S. economy remains resilient. The Bank of England, for instance, has cut rates twice this year but is expected to maintain its rate. The Fed’s approach reflects a balance between economic conditions and long-term stability amid external pressures.