US Fed expected to extend pause on rate cuts due to tariff concerns

The US Federal Reserve is expected to maintain its current pause on interest rate cuts as it assesses the economic impact of President Donald Trump's recently introduced tariffs. These tariffs, which include steep levies on China and additional duties on other countries, are anticipated by most economists to drive up prices and slow economic growth in the near term, potentially justifying the Fed's cautious stance. The central bank has kept its key interest rate between 4.25% and 4.50% since December, aiming to achieve its long-term inflation target of 2% while keeping unemployment low. Recent data suggests inflation is nearing target levels and unemployment remains stable, but softer indicators like consumer confidence have shown declining optimism and growing concerns about inflation. Economists are divided on how the Fed will balance the risks of rising inflation and weaker employment, with some expecting rates to remain steady and others predicting eventual cuts if economic conditions deteriorate. Overall, the prospect of increased tariffs and uncertainty in the global trade environment is keeping the Fed on hold for the time being.