Federal Reserve Holds Rates Amid Rising Economic Uncertainty
On May 7, 2025, the Federal Reserve announced its decision to keep the federal funds rate steady at 4.25% to 4.5% for the third consecutive meeting. This move reflects the central bank's cautious approach in the face of escalating economic uncertainties, particularly those arising from recent tariff implementations.
Fed Chair Jerome Powell highlighted the potential risks associated with sustained tariff increases, noting that they could lead to higher inflation, a slowdown in economic growth, and increased unemployment. While the economy remains resilient with solid growth and a strong labor market, Powell emphasized the need for a "wait and see" approach, stating that the full impact of trade policies has yet to materialize in economic data.
The central bank's decision comes amid pressure from the administration to lower interest rates to support growth. However, the Fed maintains its independence, focusing on its dual mandate of controlling inflation and maintaining employment.
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