The Fed has held interest rates steady and warned that the risks of higher inflation and unemployment have risen.
The central bank has held the benchmark rate between 4.25 and 4.5 percent, in line with analysts expectations.
While the Fed rate does not directly affect rates for loans, credit cards and mortgages, it strongly influences them.
Fed chair Jerome Powell said uncertainty about the economy has only increased in the first decision since President Trump unleashed a series of aggressive tariffs on much of the rest of the world.
The Fed said ‘the risks of higher unemployment and higher inflation have risen’ in a stark new warning.
Rising prices and more unemployment threatens the Fed’s dual mandate to keep prices in check while ensuring a healthy labor market.
Inflation currently remains ‘somewhat elevated’ according to the Fed’s statement.
The figures show core inflation was 2.6 percent in March compared to the same time last year.
Fed chair Jerome Powell said uncertainty about the economy has only increased
The Fed’s target is to keep inflation steady at 2 percent.
The Fed Open Market Committee, which was unanimous in choosing to hold the benchmark rate steady, gave little away about their plans for future cuts.
‘The Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,’ it said in a statement.
Traders are still pricing in three cuts before the end of the year and Trump has continued to exert pressure for cuts to come sooner.
In a press briefing following the Fed’s announcement Powell said consumer and business sentiment has ‘deteriorated’ due to ‘trade policy concerns.’
‘Survey respondents including consumers, businesses and professional forecasters point to tariffs as the driving factor,’ Powell admitted.
However, Powell added that there is ‘so much uncertainty about the scale’ of tariffs and that they are waiting to see where they ‘shake out.’
