The U.S. Federal Reserve has confirmed that it does not plan to lower interest rates in the near term, despite potential job market slowdowns. New tariffs introduced by President Donald Trump are becoming an important factor in assessing inflation risks.
Federal Reserve Not in a Rush to Cut Rates
Federal Reserve officials stated that they are not planning to inject more liquidity into the system anytime soon. They emphasized the importance of maintaining the progress made in fighting inflation since 2022. Fed Chair Jerome Powell stated, 'We’re going to need to wait and see how this plays out before we can start to make those adjustments.'
Trump Tariffs and Their Economic Impact
Minneapolis Fed President Neel Kashkari stated that tariffs make rate cuts harder to justify. 'The hurdle to change the federal funds rate one way or the other has increased due to tariffs,' Kashkari noted. Meanwhile, new inflation data showed that core inflation dropped to 2.8% for the year. Despite this dip, the Fed is not changing its plans.
Rate Cut Forecasts and Market Reactions
Economist Jeremy Schwartz mentioned that it would take a significant rise in unemployment for the Fed to act. He suggested that even a single rate cut may only occur in December, which he considers unlikely. 'Cutting in that backdrop really risks the Fed’s credibility on getting inflation back to target,' he stated.
The U.S. Federal Reserve continues to adopt a cautious approach amid uncertainty caused by new tariffs and the job market's state. It is expected that any changes to monetary policy will be thoroughly analyzed based on all influencing factors.
