The Federal Reserve did not change interest rates as it warned of economic growth this year and easing higher inflation.
Maintaining interest rates in the target range of 4.3%, central bankers forecast two cuts this year on Wednesday.
The Federal Open Market Committee signaled its sticking to an “appearing wait” approach, saying it “has increased uncertainty about the economic outlook.” Still, officials expect prices to rise slowly. This is a prediction that points to Trump's tariffs as a temporary, one-off event.
Federal Reserve Chairman Jerome Powell said the economy is still in good condition, but inflation warned that “progress is likely to be slow for the time being” as prices rise. The Fed said it expects inflation of 2.7% this year, compared to its 2.5% forecast in January.
The S&P 500, Dow and Nasdaq all rose after the meeting, with the Dow spike nearly 400 points.
“The committee is in the midst of a fog of policy as it awaits the impact of future tariffs,” said Jeffrey Roach, chief economist at LPL Financial, in a memo. “The updated forecast is more downbeat and will put downside pressure on the dollar in the short term.”
Meanwhile, Trump has asked the central bank to lower the rate in the past, shortly after batting Fed Chairman Jerome Powell and head.
Before Wednesday's meeting, analysts largely hoped the Fed would hold back interest rates for at least the coming months as trade war tensions threaten to reheat inflation.
The market has rushed into the past few weeks dramatically, losing its post-election profits completely, as a surprising threat to high-priced investors.
“There's a lot of uncertainty in the economy right now, but anyone who wants the Fed to wait at least several months has to wait at least several months,” said Matt Schulz, chief consumer finance analyst at Lendingtree, in a note ahead of Powell's press conference.
“If you're in the market for a new home, credit card or car loan, it smells bad, but good news for savers,” he added.
Earlier this month, Powell similarly claimed that the economy is in a “good place.”
“Wages are growing faster than inflation and at a more sustainable pace than early in the pandemic recovery,” Powell said in a speech earlier this month at the US Monetary Policy Forum, adding that inflation has been eased to 2%.
