Fed Holds Rates Steady as Inflation Cools Amid Tariff Uncertainty

The Federal Reserve maintained interest rates unchanged as April’s inflation data showed a modest deceleration to 2.1% year-over-year, edging closer to the central bank’s target. Yet policymakers remain cautious, with rising import costs from escalating tariffs and rebounding goods prices clouding the outlook. "This is the calm before the storm," warns Fitch Ratings’ Olu Sonola, suggesting transient relief before potential inflationary pressures resurface.

Consumer spending growth slowed sharply to 0.2% in April while savings rates climbed, reflecting households bracing for economic uncertainty. III Capital Management’s Karim Basta encapsulates the sentiment: markets face a holding pattern until either a demand collapse forces the Fed’s hand or tariff effects become clearer. For now, patience prevails.