WASHINGTON, D.C. – The Federal Reserve announced they’re keeping interest rates the same, which is just above four percent. The Federal Reserve Chair, Jerome Powell, said those rates might come down later this year. There’s been a lot of concerns with the markets and uncertainty with businesses and consumers in the past few weeks with changes from the Trump administration. The Fed said so far there’s positive data about the labor market and a low unemployment rate but they said uncertainty around the economic outlook has increased.
Powell said inflation has eased a bit but it’s still elevated. They are also warning that their key measure of inflation would now be closer to three percent, than two percent. Wednesday’s meeting was significant following recent changes from President Trump and his administration’s actions on possible trade wars, mass firings in government and deportations. Many were curious how these actions could impact the market and economy.
The President has insisted that tariffs will be good for Americans and the economy but Powell adds consumers and businesses are mentioning tariffs as a driving factor for the inflation measures moving up. Powell was asked: how much of the higher inflation rate this year will be due to President Trump’s tariffs? He responded saying it’s going to be very difficult to have a precise assessment of how much inflation is coming from tariffs and other areas.
“The answer is some of it, clearly some of it,” responded Powell. “A good part of it is coming from tariffs and we’ll be working with other forecasters to find some other possible ways to separate non-tariff inflation from tariff inflation.”
Powell was asked about the risks of a recession. He said there is always about a one in four chances of a recession but added that some private-sector estimates of recession risks have moved up, but still aren’t high.
