Citing the uncertainty around the impact of tariffs, the Federal Open Market Committee held rates steady after its meeting Wednesday.
The FOMC held rates at 4.25 to 4.5 percent. Rates have remained at the level since December 2024, six straight meetings.
“Changes to government policies continue to evolve, and their effects on the economy remain uncertain. Higher tariffs have begun to show through more clearly in prices of some goods, but their overall effects on economic activity and inflation remain to be seen,” said Federal Reserve Chairman Jerome Powell.
Powell stressed the overall strength of the economy. The annual inflation rate is at 2.5 percent. The labor market continued to be strong, with unemployment at 4.1 percent and an average of 150,000 jobs added per month.
“Despite elevated uncertainty, the economy is in a solid position. The unemployment rate remains low and the labor market is at or near maximum employment. Inflation has been running somewhat above our 2 percent longer run objective,” Powell said.
Powell repeatedly stated it’s too early to fully judge the impact of tariffs announced in the spring. New deals have also been recently announced with the European Union and other nations by the Trump Administration.
Powell said the price increases started appearing in the June numbers, but it remains to be seen what the overall effect on prices for consumers.
“[It is] not going to be zero. Consumers will pay some of this. Businesses will pay some of this. Retailers will pay some of this. But, you know, we are just going to have to see it through,” Powell said.
The FOMC will receive August and September Consumer Price Index and labor reports before its next meeting Sept. 16-17.
At this meeting, two members of the FOMC expressed interest in cutting rates.
