The Federal Reserve announced on Wednesday that it will keep interest rates unchanged, marking a pause in rate cuts amidst growing economic uncertainty.The decision follows a series of three consecutive rate cuts in 2024, with the current benchmark federal funds rate remaining between 4.25% and 4.5%.
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foxbusiness.comcbsnews.comFed policymakers voted 10-2 in favor of maintaining rates, reflecting concerns over inflation and a slowdown in the labor market.The central bank's statement highlighted that inflation remains "somewhat elevated," with projections for the Personal Consumption Expenditures (PCE) index rising to 2.8% for this year, up from previous estimates of 2.5%.
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foxbusiness.comfinance.yahoo.comAdditionally, the Fed revised its economic growth forecast downward, now expecting a GDP growth of 1.7% compared to an earlier projection of 2.1%.
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cbsnews.comfinance.yahoo.comAt a press conference, Fed Chair Jerome Powell emphasized the "high uncertainty" surrounding the economic outlook, particularly due to the Trump administration's trade policies, which include aggressive tariffs on imports from various countries.Powell noted that these tariffs are likely contributing to inflationary pressures, complicating the Fed's monetary policy decisions.
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cbsnews.comnpr.orgThe Fed's decision to hold rates steady aligns with market expectations and indicates a cautious approach as policymakers await clearer signals regarding the effects of tariffs and other economic changes.Powell remarked that, despite the uncertainty, the overall economy remains resilient, with the unemployment rate recorded at a low 4.1%.
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foxbusiness.comnpr.orgHowever, he acknowledged that consumer spending has softened, raising concerns about potential impacts on economic growth moving forward.The Fed's recent forecasts underscore the delicate balance between fostering economic growth and controlling inflation.Powell reiterated the need for a "wait-and-see" strategy, suggesting that the Fed does not feel pressured to adjust its policy stance imminently.He indicated that while inflationary effects from tariffs could be transitory, they still warrant close observation.
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finance.yahoo.comMarket reactions to the Fed's decision were positive, with major stock indices, including the Dow and S&P 500, showing gains following the announcement.Investors are now looking ahead to future meetings, with expectations that the Fed may consider rate cuts later in the year if economic conditions warrant such actions.
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cnn.comnpr.orgIn summary, the Federal Reserve's decision to maintain interest rates reflects an ongoing assessment of economic conditions against a backdrop of trade policy uncertainty and inflation concerns.Policymakers remain vigilant, ready to adjust their approach as new data emerges, balancing the goals of maximum employment and stable prices in a complex economic landscape.
