The Federal Reserve appears comfortable with keeping interest rates steady for now, as recent tariffs have not yet caused a significant rise in inflation. However, policymakers are adopting a wait-and-see approach, holding rates until they gain clearer insight into the broader effects of U.S. trade policy. While the immediate impact of President Trump’s tariffs on April’s inflation data is expected to be minor, many economists anticipate that trade-related price pressures will become more visible in the coming months.

Despite stable labor market conditions, economic growth is projected to slow throughout the year. Businesses are becoming more cautious as tariffs increase input costs and dent consumer confidence. New government data on prices will be released alongside updated figures on household demand, offering a clearer picture of the economy’s direction.

Economists forecast that inflation-adjusted consumer spending rose just 0.2% in April, down from 0.7% in March. This pullback reflects growing concerns around personal finances and job security. Still, the Fed is expected to maintain a steady policy stance. Federal Open Market Committee (FOMC) members, including Chair Jerome Powell, are likely to emphasize the importance of keeping inflation expectations anchored amid subdued price and spending trends.

End Notes

Source: https://finance.yahoo.com/news/fed-stride-another-month-tame-200000382.html