Policymakers voted to hold the US central bank's key lending rate at between 4.25 percent and 4.50 percent, the Fed announced in a statement.
“Uncertainty today is unusually elevated,“ Fed chair Jerome Powell told reporters after the US central bank's decision was published, adding that at least part of a recent rise in inflation was down to tariffs.
In an unusual move, Fed governor Christopher Waller opposed the Fed's rate decision because of his colleagues' support for slowing down the pace at which it is shrinking the balance sheet.
Since returning to office in January, Trump has ramped up levies on top trading partners including China, Canada and Mexico -- only to roll some of them back -- and threatened to impose reciprocal measures on other countries.
“Everybody knew there was not going to be a rate cut,“ Moody’s Analytics economist Matt Colyar told AFP after the Fed's decision was published. “What has changed is the kind of broader economic environment, mostly coming out of chaotic policy coming from DC.”
Economic growth was relatively robust through the end of 2024, while the labor market has remained quite strong, with healthy levels of job creation and the unemployment rate hovering close to historic lows.
Recession risk up
They also downgraded their outlook for growth next year, while raising their forecast for headline inflation in both 2025 and 2026.
Powell told reporters that the risk of recession in the United States had risen slightly in recent weeks, but was not yet a cause for concern.
At the White House, which sits a short walk from the Fed's Washington headquarters, Trump's National Economic Council director Kevin Hassett took questions about the Fed chair's press conference.
“What gets tariffed and not is something that you’ll have complete clarity on on April 2,“ he added, referring to the date at which Trump has said he intends to impose retaliatory levies on US trading partners.
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