Fed Maintains Rates Amid Tariff Inflation Concerns, Signals Possible Cuts

The Federal Reserve remains cautious on interest rate changes amid persistent inflation and uncertainty over the impact of President Donald Trump's tariffs, as revealed by the minutes from the July meeting. While inflation has shown signs of stalling, core inflation remains elevated, and the Fed anticipates that tariff-related costs will eventually be passed on to consumers, potentially leading to stubbornly high inflation. Most policymakers favored maintaining the current interest rate, with only two dissenting members advocating for a cut, reflecting a reluctance to ease monetary policy without clearer data on tariffs' effects. The Fed is expected to monitor incoming data closely in the coming months before adjusting rates, with some division among officials about whether to wait for full clarity on tariffs' inflationary impact. The financial community is awaiting Federal Reserve Chair Jerome Powell's address at the Jackson Hole Economic Symposium, a key moment that could signal the Fed's next moves on interest rates amid a complex economic landscape. Powell's speech is particularly significant as it may mark his final keynote at the symposium, and markets are bracing for guidance on the trajectory of U.S. monetary policy.