Overview

• The Federal Reserve maintained its benchmark interest rate at 4.25-4.50% during its May 7 meeting, marking the third consecutive meeting without a change.
• Chair Jerome Powell reaffirmed the Fed's commitment to basing decisions on economic data, despite President Trump's public criticism and calls for rate cuts.
• Market expectations for a June rate cut have dropped to 20%, reflecting uncertainty about inflation, unemployment, and the potential impact of new tariffs.
• President Trump's tariff policies, including a 145% tariff on Chinese goods, have disrupted markets and raised concerns about inflationary pressures and slower economic growth.
• The U.S. economy faces dual challenges of elevated inflation at 2.4% and rising unemployment at 4.2%, testing the Fed's dual mandate of price stability and maximum employment.