The move was widely anticipated, as Fed officials continue to adopt a wait-and-watch stance in the face of economic uncertainty stemming from President Donald Trump’s evolving policy agenda.
Federal Reserve officials still project a total of 50 basis points of rate cuts in 2025, but have revised their 2026 outlook to only 25 basis points of cuts, down from the previously projected 50 basis points.
The conflict in the Middle East, combined with prolonged uncertainty over Trump’s tariffs and signs of fragility in the US economy made for a challenging backdrop.
“Recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated,” Fed said in a statement.
The central bank acknowledged that uncertainty about the economic outlook has diminished but still remains elevated.Despite the Fed’s cautious tone, political pressure continues to mount. President Trump, who has long been critical of Powell’s leadership, launched yet another blistering attack ahead of the rate decision. “We have no inflation, we have only success, and I would like to see interest rates get down,” he said, demanding up to a 250-basis-point cut and deriding Powell as “just a stupid person.”
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