Federal Reserve Meeting Live: Chair Jerome Powell Says There's Still Room For Patience

What Will It Take For the Federal Reserve to Cut Rates?

13 hr 52 min ago

Chair Jerome Powell declined to comment on how the committee is broadly thinking about future rate cuts.

However, economists were more willing to examine their crystal balls after the policy announcement.

“The two-sided risks of the tariffs and trade war will keep the Fed on hold until it has a better feel for how the tariff-induced price hikes are spilling over into global supply chain disruptions and inflation expectations; and how sharply businesses are cutting costs, trimming payrolls, and putting investment on hold,” wrote Scott Anderson, BMO Capital Markets’ chief U.S. economist.

Betsey Stevenson, a former chief economist at the Department of Labor, said the economy is stable—for now.

Traders were broadly expecting the Fed to begin rate cuts in July following today’s meeting, according to the CME FedWatch Tool.

Which Side of the Dual Mandate Is More Important?

14 hr 5 min ago

Congress has tasked the Federal Reserve with doing two jobs—keeping inflation low and employment high.

However, tariffs threaten both elements of that dual mandate, which could present a challenge for central bankers.

“If that were to occur, we would consider how far the economy is from each goal and the potentially different time horizons over which those respective gaps would be anticipated to close,” Powell said. “For the time being, we’re well-positioned to wait for greater clarity before considering any adjustments our policy stance.”

When pushed to choose which of the dual mandate goals would likely be more important, Powell said there is not enough information to make that determination.

“We’ve judged that the risks to higher employment and higher inflation have both risen compared to March,” he said. “I don’t think we can say which way this will shake out. There’s a great deal of uncertainty about, for example, where tariff policies are going to settle out, and also when they do settle out, what will be the implications for the economy for growth and for employment.”

Tariffs Have Made the Path Ahead Unclear, Powell Said

14 hr 14 min ago

While today’s move was widely expected, the path forward is unclear.

In this meeting, the Federal Reserve faced record-setting monetary policy uncertainty because of tariffs. Economists, including Chair Powell himself, have said that the tariffs could have lasting impacts on the economy.

“If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown, and an increase in unemployment,” Powell said.

Tariff price increases could go one of two ways: The increase could be either a one-time jump, or persistent inflation growth, Powell said. It could depend on the size of the tariffs and how long it takes for them to pass through the economy, he said.

“Our obligation is to keep longer-term inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing problem,” he said.

Federal Reserve Chair Jerome Powell Says There’s Still Room For Patience

14 hr 28 min ago

Federal Reserve Chair Jerome Powell reiterated the need for a wait-and-see approach during a press conference following the committee’s policy announcement.

“Despite heightened uncertainty, the economy is still in a solid position,” he said. “The unemployment rate remains low, and the labor market is at or near maximum employment. Inflation has come down a great deal, but has been running somewhat above or 2% longer run objective.”

The central bank has been watching the labor market and inflation measures to see if either side of its dual mandate has been affected by broad tariffs. If either measure were to weaken, the Fed would likely be spurred to act.

“We believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments,” he said.

Fed Officials Acknowledge Wakened Economic Data

14 hr 42 min ago

In their policy statement, the Federal Reserve acknowledge that some of the economic indicators they follow have weakened in light of tariffs.

The gross domestic product, a measure of the country’s economic output, shrank in the first quarter, according to data released last week. It was the first time the measure turned negative since the first quarter of 2022 and a sharp downturn from the previous quarter.

A surge in imports recorded in May drove the decline, as companies and individuals raced to buy foreign products before President Donald Trump’s tariffs made them more expensive.

“Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace,” the committee wrote in its statement.

Federal Reserve Keeps Key Interest Rate As-Is

15 hours ago

The Federal Reserve held its benchmark federal funds rate at a range of 4.25% to 4.5% today.

This is the third meeting in a row in which the Federal Open Market Committee stood pat. The FOMC has kept the rate unchanged since December after cutting it by a percentage point over the course of three meetings late last year.

Fed officials have indicated they’re reluctant to act until they know which tariffs will stand and whether those tariffs will push up inflation, drag down the economy, or both.

Read more about the decision here.

President Donald Trump Has Pressured the Fed to Make a Cut In This Meeting

15 hr 10 min ago

If the Fed holds rates steady, one powerful Fed watcher is likely to be unhappy.

President Donald Trump has criticized the Fed Chair Jerome Powell for not cutting interest rates in recent weeks, calling for Powell’s “termination” before walking back the threat. On Sunday, Trump reiterated his criticisms during an interview on “Meet the Press,” calling the Fed “stubborn.”

The Federal Reserve, however, is an independent agency designed to be insulated from political pressure.

Research shows that inflation is consistently higher in countries where the government has more influence on central banks because heads of state are more likely to want a low interest rate. Lower interest rates help money flow more easily through an economy, which can spur inflation when unchecked.

Federal Reserve Open Markets Committee Expected to Stand Pat

15 hr 25 min ago

So far this year, central bankers have chosen to keep their influential interest rate unchanged at an elevated level. That streak of inaction is likely to continue today when the Federal Reserve’s policy-setting committee releases its decision.

According to the CME Group’s FedWatch tool, traders are pricing in just a 2.3% chance of a rate cut. Economists also broadly expect the central bankers to keep the federal funds rate at 4.25% to 4.50%.

The fed funds rate is the Fed’s main took for supporting the economy. The Fed can either lower the fed funds rate to boost the economy or raise it to push down inflation.