PowellWatch: Fed Holds Rates, Keeps Options Open
The Federal Reserve has left its benchmark interest rate unchanged for the fourth consecutive meeting, signaling patience as officials continue to weigh economic risks. Policymakers still expect two rate cuts before year-end, consistent with their March projections. However, forecasts now include slightly higher unemployment and upward revisions to inflation.
“Wait-and-See” Approach
Chair Jerome Powell stressed that the Fed is in no rush to adjust policy, opting instead to monitor how new and existing tariffs influence the broader economy. His message: the central bank has room to stay cautious until clearer signals emerge.
Tariffs Add Inflationary Pressure
Powell acknowledged that tariffs—many carried over from the Trump administration—will likely push prices higher in the months ahead. While the Fed expects some of these costs to be absorbed, a portion will inevitably reach consumers. This complicates the timing of rate cuts, even as most officials still support easing later this year.
Political Pressure Intensifies
Powell’s semi-annual testimony before Congress has placed him under sharper scrutiny. Republican lawmakers, echoing former President Trump’s long-standing criticism, are urging faster rate cuts to reduce borrowing costs. For Powell, the challenge is balancing political demands with economic prudence.