Fed Holds Interest Rates Amid Trump Tariff Pressure

The Federal Reserve is maintaining a cautious stance on interest rates amid heightened uncertainty caused by President Trump's aggressive tariff policies. While Trump continues to press for rate cuts, Fed Chair Jerome Powell and central bank policymakers are holding steady, citing the risk that tariffs may simultaneously slow economic growth and drive up inflation. Experts warn that the tariffs could trigger stagflation—where both unemployment and prices rise—leaving the Fed in a difficult position with its dual mandate to foster employment and control inflation. Recent history with supply chain shocks has made the Fed wary of assuming new inflation surges will be temporary, prompting a wait-and-see approach to further policy moves. Economists now largely expect the Fed to avoid rate changes until the economic effects of the tariffs become clearer, prioritizing inflation control if forced to choose. This policy tension underscores the broader dilemma of balancing economic stability with unpredictable government actions.