The Federal Reserve is expected to keep interest rates stable between 4.25% and 4.5% due to fears that tariffs imposed by President Trump could lead to inflation and slower economic growth. Trump has imposed significant tariffs on imports, raising consumer costs to their highest levels since the 1930s. Although consumer confidence has waned, the job market remains stable with slight hiring decreases. Despite Trump's pressure to lower rates, the Fed Chair warns of potential economic impacts from the tariffs, emphasizing the need for caution in monetary policy adjustment.
"The level of the tariff increases announced so far is significantly larger than anticipated," Fed Chair Jerome Powell told the Economic Club of Chicago last month. "The same is likely to be true of the economic effects, which will include higher inflation and slower growth."
Trump highlighted the recent drop in gasoline prices as he called on the Fed to cut interest rates. "Energy down, mortgage rates down, employment strong, and much more good news," the president wrote in a social media post last week. "NO INFLATION, THE FED SHOULD LOWER ITS RATE!!!"
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