Following its latest Federal Open Markets Committee (FOMC) meeting on May 7, the U.S. Federal Reserve kept its benchmark interest rate unchanged as it awaits the fallout of trade policy and clearer direction of the U.S. economy amidst tariff impacts.
That leaves the Fed rate at 4.25% to 4.5%. It was the second straight hold on the borrowing interest rate after the central bank enacted three cuts to it over the final four months of 2024.
U.S. Federal Interest Rate
source: tradingeconomics.com
In its post-FOMC meeting statement, the Fed warned of potential inflation and unemployment if the Trump administration pushes on with its current efforts to overhaul global trade. The committee’s policy statement noted that the group broader economic uncertainty “has increased further” and that economic indicators pointed to an overall healthy economy, but “swings in net exports have affected the data” in regards to businesses front-loading on inventory ahead of tariff impacts.
“The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen,” the Fed’s statement read.
The Fed’s next FOMC meting is on June 18.
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