Federal Reserve holds a stable interest rate on Wednesday, President Donald Trump’s tariff error for a portion of the new price increase is but chose to approach the patient. The tariff decision came a few weeks after Trump touched the global trade war which made shares shaken and triggered fears of the possibility of recession.
Even when the Fed left the main policy lever unchanged, the central bank estimated a weaker year -end economic growth and a higher inflation than in the December estimate. At the end of 2025, inflation will stand at 2.8%, slightly higher than the previous prediction of 2.5%, said Fed.
The Fed expects two quarter level cuts at the end of 2025, matching the previous predictions.
Speaking in Washington, DC, on Wednesday, Fed Chair Jerome Powell said the economy faced uncertainty, referring to Trump’s administration which has the potential to “significant policy changes” regarding trade, immigration, fiscal policy and regulations.
“This is a clean effect of this policy change that will be important for the economy and monetary policy path,” Powell said. “The uncertainty around change and influence on high economic views.”
Powell acknowledged that the tariff has contributed to the “good part” with this new price increase.
The Fed resigned in his struggle against inflation during the last month last year, lowering interest rates with a percentage of points. However, the Fed interest rate remains at a high historical level between 4.25% and 4.5%.
Comments from Powell echoed the comments he made less than two weeks ago, when he said the tariff was likely to raise prices, while advocating posture waiting and saw when Trump’s economic policy was formed.
“We focus on using the signal from noise when the situation develops,” Powell told an economic forum in New York City. “We are not in a hurry.”
The Trump administration earlier this month slapped 25% of goods tariffs from Mexico and Canada, although the White House immediately imposed a one -month delay for several tariffs. New Rounds for Chinese goods duplicated the initial tariff set placed in China a month earlier.
The tariff charged on steel and aluminum last week triggered a retaliation rate from Canada and the European Union, adding to the prevention that had been initiated by China.
Last week, s& P 500 closed more than 10% from the height of last month, marking the first correction of the index since October 2023. The average Dow Jones industry has decreased one worst week since March 2023.
A shop customer for eggs at a grocery store, March 12, 2025, in Chicago.
Scott Olson/Getty Image
However, with a few main steps, the economy remains in a dense condition. This new job report shows a stable recruitment last month and a low historical unemployment rate. Inflation stood far below the peak achieved in 2022, although the price increase registered almost the percentage of points was higher than the Fed goal of 2%.
Rotating back to his first term of office in the office, Trump has repeatedly urged Fed to reduce interest rates.
In January, during a virtual speech to the World Economic Forum in Davos, Switzerland, Trump asked the central bank to cut interest rates a few days before it was determined to announce interest rates.
At the next meeting that month, Fed decided to hold a stable interest rate. Speaking at a press conference in Washington, DC, after the announcement, Powell refused to comment on Trump’s call for lower interest rates, saying it would be “inappropriate” to respond.
“The public must be sure that we will continue to do our work as we always have,” Powell said, adding that Fed would continue to “use our tools to achieve our goals.”