The US Federal Reserve kept interest rates on hold, but signaled it might make two cuts this year, as Donald Trump continues to break with precedent and demand lower rates.
Policymakers at the American central bank lifted their projections for inflation this year, as the US president stands by his controversial tariff plans, and downgraded their estimates for economic growth.
Uncertainty has faded, they said, but remains significant. The Fed chair, Jerome Powell, cautioned that officials expect tariffs imposed by Trump to increase prices over the course of the summer.
“Increases in tariffs this year are likely to push up prices and weigh on economic activity,” Powell told reporters. “The effects on inflation could be short-lived, reflecting a one-time shift in the price level. It’s also possible that the inflationary effects could be more persistent.”
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