The Federal Reserve maintained the stable interest rates on Wednesday, failing in the tariffs of President Donald Trump for a part of recent price increases but opting for a patient approach. The decision of the rate occurred weeks after Trump fired a World Trade War that sent shares of actions and caused concern for a possible recession.
Even when the Fed left its main policy lever without changes, the Central Bank predicted a weaker economic growth at the end of the year and greater inflation than it had in a December forecast. At the end of 2025, inflation will remain at 2.8%, slightly higher than a prediction prior to 2.5%, said the Fed.
The Fed expects two cut -off rates cuts at the end of 2025, coinciding with its previous prediction.
Speaking in Washington, DC, on Wednesday, the president of the FED, Jerome Powell, said that the economy faces uncertainty, pointing out the “significant policy changes” of the Trump administration “with respect to trade, immigration, fiscal policy and regulation.
“It is the net effect of these policy changes that will import for the economy and the path of monetary policy,” Powell said. “The uncertainty about changes and their effects on the economic perspective is high.”
Powell acknowledged that tariffs had contributed to a “good part” of recent price increases.
The Fed retired in its fight against inflation during the last months of last year, reducing interest rates for a percentage point. Even so, the Fed interest rate remains at a historically high level of between 4.25% and 4.5%.
Powell’s comments echoed comments made less than two weeks ago, when he said that tariffs would probably increase prices, while advocating a waiting position and seeing as Trump’s economic policies take shape.
“We are focused on analyzing the noise signal as the situation evolves,” Powell told an economic forum in New York City. “We are not in a hurry.”
The Trump administration at the beginning of this month supplied 25% tariffs in the goods of Mexico and Canada, although the White House soon imposed a month delay for some of the rates. A new round of duties over Chinese products doubled an initial set of rates placed in China a month earlier.
The tariffs imposed on steel and aluminum last week caused Canada’s retaliation rates and the European Union, which adds to countermeasures already initiated by China.
Last week, the S& P 500 closed more than 10% since its maximum last month, marking the first correction of the index since October 2023. The Dow Jones Industrial Avenge suffered its worst fall of a week since March 2023.
A customer buy eggs in a grocery store, on March 12, 2025, in Chicago.
Scott Olson/Getty Images
However, by some key measures, the economy remains solid. A recent job report showed a constant hiring last month and an historically low unemployment rate. Inflation is well below a peak reached in 2022, although price increases are recorded almost a percentage point higher than the 2%Fed objective.
As he reminded himself to his first term, Trump has repeatedly urged to the Fed to the lowest interest rates.
In January, during a virtual speech to the World Economic Forum in Davos, Switzerland, Trump asked the Central Bank to reduce the rates days before an interest rate decision is established.
At the resulting meeting of that month, the Fed decided to keep the stable interest rates. Speaking at a press conference in Washington, DC, after the announcement, Powell refused to comment on Trump’s call for lower interest rates, saying he would be “inappropriate” responding.
“The public must be sure that we will continue doing our job as we always have,” Powell said, adding that the Fed would continue to “use our tools to achieve our goals.”
