Federal Reserve Holds Rates Steady, Highlights Economic Risks from Tariff Policies

The Fed forecasts slower growth and elevated inflation for 2025, citing uncertainty caused by the Trump administration's trade policies.

The Federal Reserve maintained its benchmark interest rate at 4.25%-4.5%, marking the second consecutive meeting without a rate change.
Officials revised their 2025 economic growth projection downward to 1.7% from 2.1%, while increasing the inflation forecast to 2.7%, above the 2% target.
Fed Chair Jerome Powell attributed rising inflation partly to tariffs imposed by the Trump administration, which he said could delay progress on price stability.
The central bank reiterated its expectation for two interest rate cuts this year but noted internal divisions, with some officials predicting fewer or no cuts.
Powell emphasized a cautious, wait-and-see approach, citing heightened uncertainty in the economic outlook due to ongoing trade and policy changes.