Federal Reserve Holds Rates Steady, Highlights Economic Uncertainty from Tariffs

The Fed projects slower growth and higher inflation for 2025, weighing potential rate cuts against risks posed by President Trump's trade policies.

The Federal Reserve kept its benchmark interest rate unchanged at 4.25%-4.5%, citing significant economic uncertainty.
Growth projections for 2025 were downgraded from 2.1% to 1.7%, while inflation forecasts were raised to 2.7%, partially due to tariff impacts.
Fed Chair Jerome Powell described the economic outlook as highly uncertain, driven by the Trump administration's tariff and trade policies.
Despite the challenges, the Fed still anticipates two rate cuts this year, though some officials expressed doubts about their feasibility.
Stock markets responded positively to the Fed's cautious approach, with major indices gaining over 1% following the announcement.