The Federal Reserve decided to maintain interest rates amidst concerns over the US economy’s stability due to President Donald Trump’s aggressive trade policies. Fed Chair Jerome Powell warned that the tariffs could lead to higher prices, weaker growth, and increased unemployment if continued. The policymakers highlighted the rising risks of inflation and unemployment while keeping the benchmark interest rate unchanged for the third consecutive time, citing increased economic uncertainty.

Powell attributed the growing inflation expectations to Trump’s tariffs, emphasizing that sustained tariff increases could result in adverse economic impacts. Despite Trump’s pressure on the Fed to cut rates, Powell reiterated the need for caution due to heightened uncertainty. The US economy faced challenges as GDP shrank for the first time in three years during the first quarter, fueling concerns of a potential recession.

Amidst the economic uncertainties, Powell reaffirmed the Fed’s commitment to assess incoming data and risks for future decisions. The Fed’s critique of the administration’s tariffs signaled its independence and commitment to economic stability. Powell acknowledged the concerns over inflation and tariffs but noted that the anticipated shocks had not materialized yet.

Regarding Trump’s demands for rate cuts and potential firing, Powell stated that it did not influence the Fed’s decision-making process. He emphasized the Fed’s focus on data and economic stability, underscoring the importance of independent decision-making in monetary policy. Powell’s responses during the press conference reflected a steadfast commitment to the Fed’s mandate despite external pressures.