The Federal Reserve held benchmark interest rates steady yesterday for the third consecutive meeting, at a range of 4.25% to 4.5%. The central bank gave no indication of plans to lower rates in the coming months, rebuffing a call from President Donald Trump to spur economic activity with rate cuts.
Federal Reserve Chair Jerome Powell signaled uncertainty about the direction of the US economy amid the recent spate of tariffs. Powell seemed undecided on whether to prioritize tackling stubborn inflation with higher rates, or to lower rates in anticipation of a predicted economic slowdown. Inflation is expected to reach 3% this year, above the bank’s goal of 2%; the US gross domestic product contracted by 0.3% last quarter.
US stock markets rose (S&P 500 +0.4%, Dow +0.7%, Nasdaq +0.3%) after news of yesterday’s outlook, and as the US prepared for highly anticipated trade talks with China later this week. The discussions will mark the first high-level interaction between the US and China since Trump’s inauguration in January.
