Logo

US Fed Holds Interest Rates Steady Amid Tariff Fears, Revises Growth Outlook

Amid escalating trade tariffs and geopolitical uncertainty, the US Federal Reserve kept interest rates unchanged, revising growth expectations down to 1.4% and inflation up to 3.0%. Despite President Trump’s criticism, the Fed remains committed to independent, data-driven decisions, signaling a watchful yet steady monetary policy in 2025.

US Fed Holds Interest Rates Steady Amid Tariff Fears, Revises Growth Outlook

Federal Reserve Maintains Rates Despite Tariff Concerns

In its latest decision, the US Federal Reserve opted to keep interest rates unchanged for the fourth consecutive meeting, maintaining the benchmark lending rate between 4.25% and 4.50%. This cautious stance comes amid rising concerns over President Donald Trump's trade tariffs and mounting geopolitical uncertainties.

Economic Growth Outlook Downgraded

The Fed revised its 2025 growth forecast downward from 1.7% to 1.4%, signaling expectations of a slowing economy influenced by trade tensions. Meanwhile, inflation projections were adjusted upward to 3.0%, alongside a modest rise in the anticipated unemployment rate to 4.5%.

Trump's Criticism and Central Bank Independence

President Trump has vocally criticized the Federal Reserve's cautious approach, notably labeling Fed Chair Jerome Powell as “stupid” for not reducing rates more swiftly. Despite this political pressure, Powell and Fed officials reaffirmed their commitment to making decisions based on objective economic analysis free from political influence.

Tariffs and Their Lingering Effects

Although recent tariffs imposed on steel, aluminum, autos, and other imports have not yet triggered widespread inflation, economists warn that the impact on consumer prices may take several months to materialize. Businesses have been able to lean on existing inventory, postponing immediate price hikes.

Market Reactions and Analyst Insights

  • KPMG economist Benjamin Shoesmith suggests that without tariff uncertainty and geopolitical tensions, the Fed might have already lowered rates.
  • Allianz Trade's Dan North points to continued consumer spending and steady job creation, indicating the economy does not currently demand rate cuts.

Looking Ahead: Patience amid Uncertainty

The Federal Reserve signals a watchful approach, anticipating two possible rate cuts later this year while many policymakers lean toward holding rates steady in 2025. With economic indicators mixed and external risks unresolved, the central bank appears to prioritize stability and measured responses over aggressive easing.

Rupee Volatility May Rise Post US Tariff Pause Expiry, Experts Warn
Rupee Volatility May Rise Post US Tariff Pause Expiry, Experts Warn

With the upcoming expiration of the U.S. President's 90-day tariff pause, the Indian rupee's recent stability may give way to greater volatility after the first half of fiscal 2026. MUFG predicts an appreciation to 83 per dollar with a potential trade deal, while Indian analysts expect fluctuations between 84-86 per dollar, emphasizing increased volatility starting September. RBI's actions will be crucial in managing these trends.

Japan’s Rising Bond Yields Raise Fears of Capital Outflows and Market Volatility
Japan’s Rising Bond Yields Raise Fears of Capital Outflows and Market Volatility

Yields on Japan’s long-term government bonds have reached near-record highs, fueling fears of capital repatriation by Japanese investors from the U.S. and potential disruptions in global financial markets. Experts warn that rising yields and a strengthening yen could unwind the yen carry trade, impact U.S. equities, and tighten global liquidity conditions. While some foresee a gradual adjustment, the evolving bond market dynamics warrant vigilant observation given their broad economic implications.

Australia's Consumer Inflation Steady in April with Rate Cuts Expected
Australia's Consumer Inflation Steady in April with Rate Cuts Expected

In April, Australia's consumer inflation rate remained stable at 2.4% year-over-year, with increased health and holiday expenses balanced by lower fuel costs. Core inflation measures stayed within the Reserve Bank's target range of 2-3%. The resilient labor market and slowing rent growth bolster expectations for potential interest rate cuts in July amid ongoing global economic uncertainties.

India Set to Drive Global Growth in 2025 and 2026, WEF Report Finds
India Set to Drive Global Growth in 2025 and 2026, WEF Report Finds

The World Economic Forum's Chief Economists Outlook identifies India as the primary engine of growth in 2025 and 2026, amid a mixed global economic climate. While North America faces weak prospects, South Asia remains robust, with India expected to grow over 6% annually. Global risks include trade shocks, rising public debt, and AI-driven job disruptions.

US Holds Over One-Third of Global Millionaires and Billionaires in 2024
US Holds Over One-Third of Global Millionaires and Billionaires in 2024

The United States holds more than a third of global millionaires and billionaires, boasting over 6 million liquid millionaires and 867 billionaires. Fueled by robust tech and AI industries, US millionaire populations grew 78% over the past decade. Key wealth centers include New York, the Bay Area, and emerging hubs in the Sunbelt, while immigration contributes to this wealth surge.

U.S. Credit Default Swaps Surge Amid Debt Ceiling Concerns, Panic Likely Overblown
U.S. Credit Default Swaps Surge Amid Debt Ceiling Concerns, Panic Likely Overblown

Investors are increasingly purchasing credit default swaps to insure against potential U.S. government debt default amid unresolved debt ceiling issues. CDS spreads on U.S. government debt have surged to near two-year highs, reflecting political risk rather than genuine default fear. Analysts predict this spike is temporary as Congress works toward a budget deal before July to raise the debt limit. The U.S. government is expected to avoid default as it has in prior crises, though fiscal challenges remain prominent following Moody's recent credit rating downgrade.

South Korea Cuts Interest Rates Amid Sluggish Economy and Trade Tensions
South Korea Cuts Interest Rates Amid Sluggish Economy and Trade Tensions

South Korea's central bank reduced its key interest rate to 2.5% and slashed the 2025 growth forecast to 0.8% to counter economic headwinds. Ongoing US tariff policies and political unrest following former President Yoon’s ousting have weakened domestic demand and trade prospects. Despite market gains, challenges remain as the country navigates global trade disputes and internal political shifts.

Fed Chair Powell Assures Trump of Non-Political Basis for Rate Decisions
Fed Chair Powell Assures Trump of Non-Political Basis for Rate Decisions

Federal Reserve Chair Jerome Powell met with President Donald Trump at the White House, emphasizing that monetary policy decisions will continue to rely on objective economic analysis rather than political influence. The central bank reaffirmed its commitment to address inflation, growth, and employment based on incoming data. Despite Trump's calls for lower rates, the Fed maintains a cautious stance amid tariff uncertainties and expects to hold rates steady for the near term.

Fed Holds Rates Amid Stagflation Concerns, Inflation Forecast Rises in 2025
Fed Holds Rates Amid Stagflation Concerns, Inflation Forecast Rises in 2025

The Federal Reserve maintained interest rates between 4.25%-4.5%, while revising inflation forecasts upward to over 3% for 2025 and lowering growth estimates to 1.4%. Chair Powell highlighted the delayed effects of tariffs on prices, implying inflation pressures may increase. Market reactions were muted. Geopolitical uncertainties persist with potential U.S. military decisions on Iran and challenging U.S.-EU trade negotiations continuing.

Fed Governor Warns Tariffs Could Reverse Inflation Gains and Impact Labor Market
Fed Governor Warns Tariffs Could Reverse Inflation Gains and Impact Labor Market

Federal Reserve Governor Lisa Cook cautions that tariffs implemented under the Trump administration may undermine recent gains in reducing inflation and pose risks to the labor market. Despite inflation hovering near the Fed's target, Cook stressed that trade-related price pressures and persistent inflation expectations complicate further progress. The Federal Reserve is expected to hold interest rates steady in the upcoming June policy meeting amid uncertainty, with officials divided over the magnitude and timing of tariff impacts on future monetary policy adjustments.

Fed Chair Powell Maintains Patience on Rates Amid Trump’s Pressure for Cuts
Fed Chair Powell Maintains Patience on Rates Amid Trump’s Pressure for Cuts

Federal Reserve Chairman Jerome Powell reiterated a wait-and-see stance on interest rate cuts during his Capitol Hill testimony, countering former President Trump’s push for immediate reductions. Powell highlighted tariff-induced inflation uncertainties but noted recent data showing muted price pressures. Despite internal Fed divisions and political pressure, the central bank prioritizes economic health over government debt concerns.

Fed Chair Powell Holds Off on Rate Cuts Despite Trump’s Pressure
Fed Chair Powell Holds Off on Rate Cuts Despite Trump’s Pressure

Federal Reserve Chair Jerome Powell has decided to wait before cutting interest rates, citing the need to monitor inflation and economic impacts of tariffs. Despite President Trump's pressure, the Fed remains focused on its dual mandate, balancing inflation control and employment. Inflation remains subdued despite trade tensions, with internal Fed opinions divided on the timing of rate adjustments.

US Federal Reserve Reaffirms Independence Amid Trump’s Rate Cut Pressure
US Federal Reserve Reaffirms Independence Amid Trump’s Rate Cut Pressure

Following a rare public statement, the US Federal Reserve has reaffirmed its non-partisan role in setting monetary policy. This comes after Chair Jerome Powell met with President Trump, who has been pressuring the Fed to reduce interest rates. The Fed emphasized that decisions will be made based on objective economic data, maintaining its independence despite political pressures.

Trump Urges Fed Chair Powell for Full-Point Interest Rate Cut Amid Strong Jobs Data
Trump Urges Fed Chair Powell for Full-Point Interest Rate Cut Amid Strong Jobs Data

President Donald Trump has called on Federal Reserve Chairman Jerome Powell to cut interest rates by a full percentage point following a robust May jobs report showing 139,000 new payrolls, exceeding expectations. Trump criticized Powell's approach, labeling it a "disaster" and asserting lower borrowing costs are essential for economic growth. The president’s demand continues the ongoing tension over monetary policy during his term.

Vance Joins Trump in Criticizing Fed’s Reluctance to Cut Interest Rates
Vance Joins Trump in Criticizing Fed’s Reluctance to Cut Interest Rates

Vice President JD Vance has joined former President Trump in pressing the Federal Reserve to lower interest rates following recent inflation data showing only slight increases. The move highlights growing political pressure on the Fed, which has kept rates steady despite inflation levels slightly above the 2% target. Market analysts note the Fed faces a tough choice balancing easing concerns with economic uncertainties, with a rate decision due next week.

US Markets Dip Despite Positive Trade and Inflation Updates on June 12, 2025
US Markets Dip Despite Positive Trade and Inflation Updates on June 12, 2025

On June 12, 2025, US equity markets slipped as cautious investor sentiment persisted despite encouraging trade and inflation data. Treasury officials hinted at extending tariff pauses, yet existing tariffs on China remain unchanged. Consumer inflation remained low, but government deficits surged. Economic leaders warn of potential downturns amid ongoing fiscal and geopolitical pressures.

New Zealand Suspends Millions in Aid to Cook Islands Over China Deals
New Zealand Suspends Millions in Aid to Cook Islands Over China Deals

New Zealand has paused over US$11 million in aid to the Cook Islands after the island nation signed a strategic partnership with China. New Zealand cited a lack of consultation and concerns over national security, emphasizing the need to restore trust before resuming support. This move highlights rising tensions in the Pacific amidst China's expanding regional presence.

Putin on NATO's Rearmament Threat: ‘Russia Can Defend Itself’ Amid Ukraine Conflict
Putin on NATO's Rearmament Threat: ‘Russia Can Defend Itself’ Amid Ukraine Conflict

Russian President Vladimir Putin firmly dismissed NATO's planned military rearmament as no threat to Russia’s security, affirming the country’s robust defense capabilities. As NATO prepares to discuss boosting defense budgets to 5% of GDP, Ukrainian President Zelenskyy is set to attend the summit to seek support. Meanwhile, North Korea pledges to send thousands of workers to aid Russia in reconstructing the war-impacted city of Kursk, highlighting growing international complexities surrounding the Ukraine conflict.