Fed, Brazil Hold Rates Amid Tariff-Driven Inflation Pressure

The Federal Reserve decided to hold interest rates steady at 4.25%-4.50%, with two governors dissenting and advocating a 25 basis-point cut due to labor market weakness. Chair Jerome Powell emphasized concerns about inflation driven by President Trump's tariffs, which have increased costs on imported goods to levels unseen since World War II, and stressed the importance of maintaining the Fed's independence despite White House pressure for rate cuts. Economists now see about a 38%-45% chance of a rate cut in September, reflecting uncertainty about inflation and economic growth. Meanwhile, the Bank of Japan is expected to keep its short-term rate at 0.5% amid political instability and the impact of US tariffs, particularly following a recent US-Japan trade deal under President Trump. Brazil's Central Bank also held its benchmark rate at 15% after multiple hikes, as Trump's 50% tariffs on Brazilian goods threaten the country's economy and deepen geopolitical tensions. These global monetary policy decisions highlight ongoing challenges related to trade tensions, inflation, and political pressures influencing central banks worldwide.