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Fed Holds Rates Steady Amid Tariff Uncertainty

New York, NY, USA

May 11, 2025 0 Neutral I want money/finance advice

Washington, D.C., USA: The Federal Reserve has chosen to keep its benchmark interest rate at 4.25%–4.5%, rebuffing calls for a rate cut from President Donald Trump, who hoped to stimulate growth amid ongoing tariff conflicts. Chair Jerome Powell cited continued uncertainty around global trade negotiations—particularly with China and others targeted by the administration’s tariffs—as a key reason for caution. Inflation remains above the Fed’s 2% target, while the economy has shown signs of both resilience and softening, leaving policymakers in a wait-and-see stance rather than making bold moves. Markets responded modestly upward following news of the steady rates, signaling that many investors had anticipated such a decision. Still, questions remain about how tariffs may hamper growth in the coming months.

What this means for you:

•	Check your adjustable-rate debts (credit cards, variable-rate loans). If the Fed decides to hike later to tame inflation, these payments could rise.
•	If you’re considering a new home purchase or refinancing, you have a short window to lock in current rates. Compare lender offers to secure favorable terms.
•	For near-term savings goals, look into high-yield accounts or CDs—stubbornly higher rates can benefit savers.
•	In the meantime, remain watchful of tariff developments. If trade talks yield a breakthrough, consumer prices for imported goods may stabilize, but if not, factor potential cost hikes into your budget.

Key Entities

• Federal Reserve: The central bank of the United States, founded in 1913. It sets monetary policy to promote stable prices and maximum employment.
• Jerome Powell: Chair of the Federal Reserve, appointed in 2018. Oversees the Federal Open Market Committee, which sets interest rate policy.
• Donald Trump: The current US president pressing for rate cuts to offset tariff impacts. He wields significant influence over trade policy.
• US-China Tariff Dispute: Ongoing trade tension with major tariffs exchanged between the US and China. These measures affect global supply chains.

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