From Yahoo Finance: 2025-05-07 14:12:00

The Federal Reserve chose to keep the key interest rate steady at 4.25% to 4.5% amid uncertainty from Trump’s tariffs. Powell warned of inflation and unemployment risk in a press conference. The Fed’s dual mandate may be challenged by the need to balance slowing growth and rising inflation. The Fed faces pressure to act but remains independent.

Economic data could push the Fed to act as tariffs impact the job market. Uncertainty remains as to whether trade deals will be struck to remove tariffs. The job market remains steady, but inflation hovers slightly above the 2% goal, giving the Fed room to maneuver. Financial markets anticipate a rate cut in July.

The Fed may face a recession risk if it waits too long to lower rates, according to analysts. Balancing the challenges of unemployment and inflation may require rate changes in opposite directions. Powell’s comments highlight the delicate balance the Fed must maintain.

Read more: Federal Reserve Keeps Key Interest Rate Unchanged