Federal Reserve officials decided the economic climate is a little too uncertain as they wait to see how the effects of President Donald Trump’s tariffs on Canadian, Mexican and Chinese goods affect the U.S. economy.
Following its meeting Wednesday, the Fed board decided to keep interest rates right where they were while they weigh the impact of Trump’s economic agenda.
Wednesday’s decision, which comes at the conclusion of the Fed’s two-day monetary policy meeting, shows that central bankers are waiting for evidence that inflation is headed toward their 2% target — or that the economy is weakening more than expected. Those are the two outcomes that would put rate cuts back on the table, according to a report from
CNN.
Officials still figure to trim borrowing costs twice this year, according to the latest economic projections they released Wednesday. The CNN report points out that eight officials are predicting either one cut or none this year; only four thought that back in December.
Fed Chair Jerome Powell, speaking in his usual post-meeting news conference, acknowledged the high level of uncertainty among American consumers and businesses — a lot of it stemming from the Trump administration’s “turmoil,” he said. Powell said that “it remains seen how these developments affect future spending and investment.”
The decision leaves the Fed’s key borrowing rate in the 4.25% to 4.5% range. Standing pat also allows Fed policymakers to see how the Trump administration’s flurry of policy changes ultimately affects the U.S. economy, Powell said.
In recent speeches, officials have said they’re willing to adjust interest rates in either direction, depending on what economic figures show, CNN reported.
The Fed’s latest pause marks the second time in a row that the central bank held borrowing costs steady.
All 12 Fed officials with voting power voted in favor of Wednesday’s decision to hold interest rates steady, though Fed Governor Christopher Waller dissented to a decision to slow the pace of the central bank’s offloading of securities on its balance sheet, according to CNN.
