Here’s a news article based on the provided text, focusing on the US Fed‘s recent decision to hold interest rates steady and the implications of that decision, along with related commentary.
Title: US Fed Holds rates Steady, Signals Cautious Approach Amid Inflation Concerns
[CITY, STATE] – In a widely anticipated move, the US Federal Reserve (Fed) maintained its benchmark interest rates in the range of 4.25% to 4.5% following its June meeting. This marks the fourth consecutive meeting where the Fed has opted to hold steady,signaling a cautious approach as it navigates persistent economic uncertainties,including the potential inflationary impact of tariffs.
“Uncertainty about the economic outlook has diminished but remains elevated. The Committee is attentive to the risks to both sides of its dual mandate,” the Federal open Market Committee (FOMC) said in its release.
Fed Cuts Growth Forecast, Raises Inflation Expectations
The Fed also revised its economic outlook, cutting the 2025 US GDP forecast from 1.7% to 1.4%. Simultaneously, the central bank raised its inflation estimates, projecting core Personal Consumption Expenditures (PCE) inflation at 3.1% by the end of 2025, compared to the 2.8% projected in March. While inflation has gradually decreased over the past two years, it remains above the Fed’s 2% target.
Powell Cautions on Impact of Tariffs
fed Chair Jerome Powell addressed concerns about potential upward pressure on inflation stemming from tariffs. “Everyone that I know is forecasting a meaningful increase in inflation in coming months from tariffs because someone has to pay for the tariffs,” Powell stated.He cautioned that US consumers would likely bear at least part of the cost of these tariffs.
“Wait and Watch” Approach
Powell reiterated the Fed’s intention to adopt a “wait and watch” approach regarding future rate cuts, tempering expectations for near-term reductions. “The economy seems to be in solid shape,so the labor market is not crying out for a rate cut,” he explained.
Chris Zaccarelli, chief investment officer at Northlight Asset Management, commented on the Fed’s stance: “Effectively they are sitting on their hands, waiting to see if tariffs increase inflation or the jobs market starts to falter, and whichever part of their dual mandate is impacted first will likely guide whichever direction they take, even though the bias is still toward cutting rates (or at least keeping rates unchanged; not raising rates).”
Trump’s Criticism
Former President Donald Trump has been a vocal critic of Powell, repeatedly calling for rate cuts. Ahead of the Fed’s decision, Trump labeled Powell “stupid” and “political,” asserting that “We have no inflation, we have only success.”
Trump’s past criticisms of Powell are well-documented, with tensions arising during Trump’s presidency when Powell raised rates.
US Interest Rates to Stay Higher for Longer?
The June Fed meeting suggests that US interest rates may remain elevated for an extended period. Timothy Chubb, Executive Vice President and Chief Investment Officer at Girard, noted the challenges this poses. “this is a challenging habitat for anyone carrying high-interest debt, applying for a mortgage, or managing a business reliant on borrowing,” Chubb said in a statement to USA Today. He added that “These high rates for longer disproportionately affect lower-income households and highly leveraged consumers who are more exposed to financial stress.”
Chubb also pointed out that wage growth is now outpacing price increases, leading to gains in purchasing power for American workers, even in a high-interest rate environment.
Following the fed meeting, US stocks pared gains as Powell’s commentary was perceived as more hawkish than anticipated, particularly given the lower-than-expected 2.1% rise in the Consumer Price Index (CPI) for May.
