By CHRISTOPHER RUGABER
WASHINGTON (AP) — Federal Reserve officials agreed earlier this month to hold off on any interest-rate moves while they evaluated the impact of President Donald Trump’s tariffs on inflation, unemployment, and the broader economy.
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Their decision flew in the face of Trump’s repeated calls to reduce borrowing costs because, in his view, there is “NO INFLATION.” The central bank cut its key rate three times last year to about 4.3%. Federal Reserve staff economists said during the meeting that inflation “remained elevated,” the minutes showed.
Trump’s tariffs have created a dilemma for the Fed because the duties could both raise inflation — which the Fed would typically fight with higher interest rates — and slow the economy and push up unemployment, which the central bank usually tries to counter with lower rates.
Officials “judged that downside risks to employment and … upside risks to inflation had risen, primarily reflecting the potential effects of tariff increases,” the minutes said.
Since the meeting, many officials have underscored that the Fed may have to wait for some time before making any further moves with interest rates.
Policymakers said there was “considerable uncertainty surrounding the evolution of trade policy” and its impacts on the economy, the minutes said.
“Taken together, (officials) saw the uncertainty about their economic outlooks as unusually elevated,” the minutes said.
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