Live Updates: Economic Uncertainty Prompts Fed to Maintain Interest Rates and Consider Future Cuts

Jerome Powell, the Chairman of the Federal Reserve, expressed concerns that tariffs might delay further strides in managing inflation. While the Fed chose to leave interest rates unchanged, they indicated the possibility of reducing them twice before the year ends.

In a decision marked by anticipation of rising inflation and decelerating growth, the Federal Reserve opted once again to keep interest rates steady after their recent meeting. This decision aligns with their earlier forecast predicting two additional rate cuts this year.

The central bank maintained its current interest rate range between 4.25% and 4.5%, continuing a pause initiated in January, which followed a series of rate reductions in late 2024 that decreased borrowing costs by a full percentage point.

This decision comes at a time loaded with economic uncertainty, largely influenced by a wave of policy changes introduced by President Trump since his recent return to office. These developments present challenges for the Fed, which is still trying to control persistent inflation without negatively impacting what seems to be a robust labor market.

In their Wednesday statement, the Fed acknowledged that “the uncertainty surrounding the economic outlook has increased,” yet maintained an optimistic view of the economy’s current condition. They noted that economic activities are “expanding at a solid pace,” and the unemployment rate “remains stable at a low level,” although inflation is “somewhat elevated.”

Federal Reserve officials have adjusted their economic growth projections, now expecting a 1.7% expansion this year, down from the previous estimate of 2.1%. They also foresee the unemployment rate climbing to 4.4%. Additionally, their forecast for core inflation, which omits fluctuating costs of food and energy, has been adjusted to 2.8%.