Fed prompts two cuts in 2025, with Jerome Powell warning that tariffs trigger a “meaningful increase” in inflation
US Federal Reserve Meeting: The U.S. Federal Reserve keeps its benchmark interest rate unchanged 4.25-4.5%as expected, but retained Two speed cuts in 2025although the growth rate is expected to be slower and inflation is higher.
The Fed’s Point, a summary of closely watched policymaker expectations, demonstrated caution, although Chairman Jerome Powell said the central bank was still “Good location waitingBefore any policy adjustments are made.
Two tax rates are still being cut on the table this year
Despite ongoing inflation problems, the Federal Open Market Committee (FOMC) sticks to its forecasts Two reductions before the end of 2025although officials now see Reduced rate reduction in 2026 and 2027. The long-term intermediate projection of Fed funding interest rates is modified to 3.4% by 2027start with a steeper speed.
especially, 7 out of 19 members Opposition to any rate of cuts in 2025, up from four in March, reflects the division within the commission.
GDP Outlook trimmed, inflation estimate revised higher
The central bank now believes that U.S. GDP growth in 2025 is only 1.4%, lower than its earlier forecast of 1.7%. Meanwhile, PCE inflation is expected to climb to 3%, while core PCE (excluding food and energy) is fixed at 3.1%, both of which have risen by 30 basis points from March forecasts.
The unemployment rate is slightly above 4.5%, indicating a softening of the labor market.
Powell’s tariffs, uncertainty and Trump
Fed chair Jerome Powell Admit this is the latest Tariffs proposed by President Donald Trump May lead to “Inflation increases meaningfully in the coming months”, noting that someone eventually “has to pay for the tariffs.” ”
However, he pointed out that Soft consumer demand and inventory accumulation. He also commented that uncertainty has eased, but it still rises: “For the time being, we have the ability to wait to learn more about possible economic processes before considering any adjustments to our policies.”
Market reaction silent, Trump slams
Wall Street ended the meeting, largely Dow slipped 0.1%,,,,, S&P 500 fell 0.03%and Nasdaq rises 0.1%.
Meanwhile, Trump launched a new attack on the Fed, saying the central bank should have lowered the fee rate At least 200 basis points and marked as Powell’s “stupid” delay.
What’s next?
and Retail sales fell by nearly 1% in Maythe starting point of housing is a five-year low, the layoffs are checked, if the risk of scattering is getting higher and higher.
Now, as markets continue to balance the implications of tariffs, geopolitical and fiscal pressures, the Fed’s next move will depend on incoming inflation and labor data.
