Washington, D.C. – The Federal Reserve cut its growth forecast for the US economy, attributing the slowdown to President Donald Trump’s tariffs that have led to increased prices. The central bank kept interest rates unchanged, citing a need to observe the impact of the White House policies before making any adjustments. Federal Reserve Chair Jerome Powell expressed concerns about the effects of tariffs on economic growth and price stability during a press conference following the announcement.
President Trump, who has previously criticized the Federal Reserve, urged the central bank to lower interest rates in light of the tariffs affecting the economy. Despite Trump’s calls for rate cuts, Powell emphasized that the economy still appeared healthy overall, with some uncertainties arising from the current trade policies. The Federal Reserve projects a growth rate of 1.7% for this year, down from the previous estimate of 2.1%, while also forecasting an inflation rate of 2.7% by the end of the year.
The ongoing trade tensions and tariff policies have raised concerns among economists, leading to market volatility and a decline in stock prices. The Federal Reserve’s decision to hold interest rates steady reflects a cautious approach to managing the potential impacts of tariffs on the economy. To counter the effects of tariffs, the Federal Reserve announced a slowdown in asset sales, providing additional support for the economy.
Despite the challenges posed by trade policies, the Federal Reserve remains vigilant in monitoring economic indicators and public sentiment towards inflation. While inflation rates have shown signs of exceeding the bank’s target, Powell emphasized the need for further data to assess the economy’s trajectory accurately. The central bank’s decision to maintain a wait-and-see approach reflects a commitment to supporting economic stability in the face of trade uncertainties.
Market reactions to the Federal Reserve’s announcement were positive, with leading stock indexes in the US experiencing gains. The S&P 500 closed up more than 1% following the news, indicating investor confidence in the central bank’s strategy. As the Federal Reserve continues to navigate the impact of tariffs on the economy, policymakers are prepared to make necessary adjustments to ensure sustained growth and price stability in the long term.