The U.S. Federal Reserve held interest rates steady Wednesday, signaling a continued pause in cuts while warning that rising risks – likely tied to President Donald Trump’s tariffs – could threaten its inflation and employment targets.
In a unanimous decision, policymakers kept the central bank’s benchmark lending rate at 4.25% to 4.50%, according to a statement.
With a dual mandate to curb inflation and support employment, the Fed adjusts its key rate as its primary tool – raising, holding or lowering it as economic conditions demand.
The Fed said that “swings in net exports” did not appear to have affected solid economic activity – a nod to the pre-tariff surge in imports in the first quarter ahead of the introduction of Trump’s “Liberation Day” tariffs.
The president introduced steep levies last month on China, and lower “baseline” tariffs of 10% on goods from most other countries, sparking weeks of turbulence in financial markets.
The White House also slapped higher tariffs on dozens of other trading partners, then abruptly paused them until July to give the U.S. time to renegotiate existing trade arrangements.
Data published in recent weeks point to an economic contraction in the first quarter of the year, while the unemployment rate has hovered near historic lows and inflation has trended toward the Fed’s long-term target of 2%.
