The Federal Reserve decided to keep interest rates steady on Wednesday, maintaining them at 4.25 percent to 4.5 percent. This marks the same rate since December, following previous cuts last year. Chairman Jerome Powell cautioned that ongoing tariffs and trade disputes are likely to cause inflation and could slow economic growth while increasing unemployment.
Powell expressed uncertainty about the future of the U.S. economy. He admitted it’s hard to predict whether the current situation will improve or worsen. “It’s really not at all clear what it is we should do,” he said during a news conference.
President Donald Trump has imposed tariffs on several countries, particularly targeting major trading partners like Canada, China, and Mexico. These tariffs, along with the administration’s messaging, have caused market instability in recent months. While Canada and Mexico have been in talks with the U.S. regarding various issues, relations with China have become more strained. Treasury Secretary Scott Bessent mentioned that a meeting is set for U.S. officials to talk with Chinese representatives in Switzerland this weekend.
Despite the turmoil surrounding tariffs, Trump continues to promote a pro-business agenda. He has promised to extend his 2017 tax cuts and is working on what he calls "The One, Big, Beautiful Bill." In a recent post on Truth Social, he stated, “We are going to do NO TAX ON TIPS, NO TAX ON SENIORS’ SOCIAL SECURITY, NO TAX ON OVERTIME, and much more.” He emphasized that this plan would be the largest tax cut for middle and working-class Americans, aiming to make life better for everyday people.
As the Fed holds steady on rates, many are watching closely to see how these economic factors will unfold in the coming months.