Overview

• The Federal Reserve is maintaining its federal funds rate at 4.25%–4.50%, describing the stance as moderately restrictive to allow flexibility in responding to economic changes.
• Vice Chair Philip Jefferson highlighted that sustained tariffs could disrupt disinflation progress and potentially lead to a temporary rise in inflation.
• Recent economic data, including a 0.3% GDP contraction in Q1, is seen as inconclusive, with trade-related factors complicating assessments of economic trajectory.
• While housing services inflation has steadily declined, core goods inflation has seen a slight uptick, and short-term inflation expectations have risen, though long-term expectations remain anchored near 2%.
• The Fed will continue to monitor hard data closely, with Jefferson reiterating the importance of assessing the evolving outlook before making further policy adjustments.