The US Federal Reserve has voted to keep interest rates unchanged, citing growing economic “uncertainty” linked to President Donald Trump’s ongoing trade war.
The central bank warned of potential risks, including “higher unemployment and higher inflation.” The decision keeps rates within the 4.25% to 4.5% range.
This move comes just weeks after President Trump unsettled global markets by suggesting he might dismiss Fed Chairman Jerome Powell, criticising him for being “too late” in cutting rates. Powell had previously indicated that the trade war was limiting the Fed’s ability to reduce borrowing costs.
Trump has consistently claimed that tariffs do not fuel inflation, framing them instead as a tax on foreign countries that benefits American citizens, despite the burden often falling on U.S. consumers.
While the Fed aims to maintain inflation at 2%, the most recent data from March showed a rate of 2.4%.
In its latest statement, the Fed reaffirmed its commitment to “supporting maximum employment and returning inflation to its 2% objective,” adding that any future policy changes would depend on “incoming data, the evolving outlook, and the balance of risks.”
Just minutes before the Fed’s announcement, Trump told reporters he would not ease tariffs on China as an incentive to resume trade negotiations with the world’s second-largest economy.
