Fed Holds Rates Steady Amid Trade Policy Uncertainty, Powell Cites Tariff Concerns

Federal Reserve Chair Jerome Powell signaled caution as the central bank maintained interest rates at 4.25%-4.5% during its May policy meeting. The decision reflects growing dual risks of slowing economic growth and persistent inflationary pressures.

"There’s so much uncertainty about the scale, scope, timing and persistence of the tariffs," Powell stated during the post-meeting press briefing. The Fed chair explicitly linked trade policy outcomes to the central bank’s ability to achieve its economic objectives, noting progress could stall if Trump-era tariffs remain in place.

Market participants await clearer signals on both monetary policy and trade developments, with the FOMC adopting a wait-and-see approach until more data emerges. The current economic landscape presents policymakers with the delicate challenge of balancing growth concerns against inflation risks.