The Federal Reserve in the United States maintained interest rates but hinted at possible cuts in the future, amid President Donald Trump’s push for lower rates. The central bank raised inflation projections for the year due to Trump’s tariff plans, while lowering estimates for economic growth. Fed Chair Jerome Powell warned of potential price increases from tariffs and their impact on economic activity. Despite Trump’s criticism of Powell, the central bank emphasizes making decisions based on economic data rather than political influence.
Policymakers anticipate a 3% inflation rate this year, higher than the previous estimate, underscoring the distance from the Fed’s 2% target. With uncertainties stemming from Trump’s tariffs affecting the global economy, the Fed projects a 1.4% growth rate for the US economy, down from previous estimates. While the targeted federal funds rate remains unchanged, there is a consensus among most officials for rate cuts in 2025 and beyond, although some members disagree.
The Fed acknowledges the solid pace of economic expansion amid low unemployment and solid labor market conditions but notes elevated inflation. Despite Trump’s pressure, the Fed maintains its independence and commitment to data-driven decision-making. Markets reacted positively initially but later stabilized. Powell expressed concerns over potential cuts to statistical agencies producing economic data, highlighting the importance of robust economic measurement for informed policymaking and public benefit.
