Federal Reserve keeps interest rates steady amid economic uncertainty

The Federal Reserve decided to keep interest rates unchanged at its latest meeting, maintaining them between 4.25% and 4.5%. This marks the fourth consecutive meeting without a rate adjustment, reflecting caution due to an uncertain economic outlook. Fed Chair Jerome Powell emphasized that the economy remains strong, with low unemployment at 4.2% and steady wage growth.

However, concerns about rising inflation, driven by new tariff policies, have led the Fed to hold off on rate cuts for now. Powell noted that inflation is currently at 2.3% over the past year, but tariffs could push prices higher. The Fed lowered its economic growth forecast for 2025 to 1.4% and raised its inflation projection to 3%.

Despite these changes, officials still expect two rate cuts later this year, though some now predict fewer or none, highlighting the uncertainty surrounding trade policies and their impact. The Fed’s decision reflects a wait-and-see approach, as policymakers seek more clarity on how tariffs and other government policies will affect the economy.

Powell stressed that the current monetary policy is well-positioned to respond to future developments. While the economy is solid, the Fed remains focused on balancing its goals of stable prices and maximum employment amidst ongoing uncertainties.