The Federal Reserve yesterday announced it has kept the benchmark interest rate steady, as expected. The Fed’s target range for the funds rate remains at 4.25% to 4.5%, which has been unchanged since the Federal Open Market Committee met Dec. 18. As of May 6, the effective federal funds rate was at 4.33%.
At a news conference, Fed chair Jerome Powell warned that the economy faced growing risks of higher unemployment and higher inflation due to tariff increases.
“If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment,” Powell said, as reported by The Wall Street Journal.
“We don’t feel like we need to be in a hurry. We feel like it’s appropriate to be patient,” he said.
WSJ reported that investors broadly expect the Fed to cut interest rates by the second half of the year.
