The Federal Reserve in a closely watched decision Wednesday held the line on benchmark interest rates though still indicated that reductions are likely later in the year.
Faced with pressing concerns over the impact tariffs will have on a slowing economy, the rate-setting Federal Open Market Committee kept its key borrowing rate targeted in a range between 4.25%-4.5%, where it has been since December. Along with the decision, officials updated their rate and economic projections for this year and through 2027 and altered the pace at which they are reducing bond holdings.
In its post-meeting statement, the FOMC noted an elevated level of ambiguity surrounding the current climate.
“Uncertainty around the economic outlook has increased,” the document stated. “The Committee is attentive to the risks to both sides of its dual mandate.”
The Fed is charged with the twin goals of maintaining full employment and low prices.
At the news conference, Powell noted that there had been a “moderation in consumer spending” and it anticipates that tariffs could put upward pressure on prices. These trends may have contributed to the committee’s more cautious economic outlook.