The Federal Reserve kept interest rates steady this week, citing uncertainty around the economic impact of recently announced tariff hikes. Fed Chair Jerome Powell warned that sustained tariffs could lead to higher inflation, slower growth, and increased unemployment — a tough mix for policymakers.
The Fed is choosing a cautious “wait and see” approach, balancing the risk of rising prices with signs of economic slowdown. While inflation expectations remain stable and the job market is cooling, tariff-related shocks are creating new complications.
Although markets expect a rate cut later this year, Powell emphasized patience, saying the Fed needs more data before making its next move.