\n<\/p>\n
The US Federal Reserve kept interest rates on hold, but signaled it might make two cuts this year, <\/strong>as Donald Trump continues to break with precedent and demand lower rates.<\/p>\n Policymakers at the American central bank lifted their projections for inflation this year, as the US president stands by his controversial tariff plans, and downgraded their estimates for economic growth.<\/p>\n Uncertainty has faded, they said, but remains significant. The Fed chair, Jerome Powell, cautioned that officials expect tariffs imposed by Trump to increase prices over the course of the summer.<\/p>\n \u201cIncreases in tariffs this year are likely to push up prices and weigh on economic activity,\u201d Powell told reporters. \u201cThe effects on inflation could be short-lived, reflecting a one-time shift in the price level. It\u2019s also possible that the inflationary effects could be more persistent.\u201d<\/p>\n Avoiding persistent inflation \u201cwill depend on the size of the tariff effects\u201d and how long it takes them to affect prices, Powell added.<\/p>\n Hours before the central bank announced its latest decision, Trump called Powell \u201cstupid\u201d and accurately <\/strong>predicted rates would be maintained on Wednesday.<\/p>\n \u201cHe\u2019s a political guy who\u2019s not a smart person, but he\u2019s costing the country a fortune,\u201d Trump, whose attacks have raised questions over the Fed\u2019s independence, claimed of Powell. The central bank has repeatedly stressed it makes decisions based on economic data, rather than political interventions.<\/p>\n Federal interest rates have remained flat after some cuts in 2024 for the first time since 2020.<\/p>\n Policymakers at the central bank expect inflation to increase by a median rate of 3% this year, according to projections released alongside its latest decision on Wednesday, up from a previous estimate of 2.7% \u2013 and highlighting how far the US remains from the Fed\u2019s inflation target of 2%.<\/p>\n As Trump\u2019s aggressive tariffs agenda continues to disrupt the global economy, and raises concern about price growth, officials at the Fed have repeatedly warned of an uncertain road ahead.<\/p>\n They expect the US economy to grow by a median rate of 1.4% this year, down from March\u2019s 1.7% estimate, which itself was a significant downgrade from the previous 2.1% estimate in December.<\/p>\n As the Fed confirmed on Wednesday that a targeted federal funds rate had been held at a range of 4.25% to 4.5% <\/strong>following its rate-setting open market committee\u2019s latest two-day meeting, it said: \u201cUncertainty about the economic outlook has diminished but remains elevated.\u201d<\/p>\n A closely watched \u201cdot plot\u201d, which shows policymakers\u2019 predictions for the trajectory of rates, indicated that most expect to cut rates at least twice in 2025, with further cuts in future years.<\/p>\n But officials do not universally agree on the path ahead. Seven of the nineteen officials on the committee do not expect to cut rates at all this year.<\/p>\n \u201cWe have a pretty healthy diversity of views on the committee,\u201d Powell told reporters, citing differences in economics predictions and views on how the Fed should respond.<\/p>\n \u201cAlthough swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace,\u201d the committee said in a statement. \u201cThe unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.\u201d<\/p>\n The central bank has so far defied Trump\u2019s attacks on its decisions, holding firm on its independence from the White House. After Powell spoke with the US president last month, the Fed said that he had made clear that its actions \u201cwill depend entirely on incoming economic information and what that means for the outlook\u201d.<\/p>\n Wall Street rose after the announcement on Wednesday, <\/strong>but later slipped back. By mid-afternoon in New York both the benchmark S&P 500 and the Dow Jones industrial average were broadly flat.<\/p>\n Ryan Sweet, chief US economist at Oxford Economics, said: \u201cThe Federal Reserve\u2019s crystal ball is still clouded and feeds into its bias toward being reactionary, rather than preemptive.\u201d<\/p>\n Looking ahead, Powell expressed concern over cuts to US statistical agencies that produce data on the economy. While he stressed the Fed was still able to do its job, he warned of \u201cmore volatility\u201d in surveys as a result of layoffs.<\/p>\n \u201cThe United States has been a leader for many, many years in this whole project of measuring, and understanding what\u2019s happening in our very large and dynamic economy,\u201d he said. \u201cAnd I hate to see us cutting back on that, because it is a real benefit to the general public.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" The US Federal Reserve kept interest rates on hold, but signaled it might make two cuts this year, as Donald Trump continues to break with precedent and demand lower rates. Policymakers at the American central bank lifted their projections for inflation this year, as the US president stands by his controversial tariff plans, and downgraded<\/p>\n","protected":false},"author":1,"featured_media":8899,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[521,522,319,518,519,520,517,71],"class_list":{"0":"post-8898","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-defying","9":"tag-demand","10":"tag-federal","11":"tag-holds","12":"tag-interest","13":"tag-rates","14":"tag-reserve","15":"tag-trumps"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/8898","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8898"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/8898\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/8899"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8898"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8898"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8898"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}