The US Federal Reserve has revised its economic outlook, lowering GDP growth forecasts to 1.7% for the year while raising inflation projections to an average of 2.7%. Fed Chair Jerome Powell highlighted heightened uncertainty tied to the Trump administration's tariff policies, suggesting these changes have contributed to rising inflation expectations. As a response, the Fed maintained its interest rate range of 4.25% to 4.5%, but may consider cuts later in the year. The broader implications of these changes resonate through the economy and global markets as businesses react to policy shifts.
"The Fed expects inflation to increase by an average rate of 2.7% this year, revised up from a previous estimate of 2.5%."
"Policymakers at the Fed cut GDP growth estimates for this year to 1.7%, down from the previous 2.1% estimate, reflecting rising uncertainty in the economic outlook."
"Jerome Powell cautioned that uncertainty is unusually elevated due to the Trump administration's economic overhaul, with tariffs impacting the inflation expectations."
"Despite holding interest rates steady at 4.25% to 4.5%, the Fed's future dot plot indicates potential rate cuts twice this year."
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