Fed holds interest rates steady, still sees additional cuts coming

In its latest policy meeting, the Federal Reserve opted to maintain the benchmark federal funds rate within the 4.25% to 4.50% range, reflecting a cautious stance amid escalating trade tensions and persistent inflationary pressures.

This decision aligns with market expectations, as investors had largely anticipated a pause in rate adjustments.

Fed officials have indicated a preference for a "wait-and-see" approach, seeking clarity on the economic implications of recent trade policies before making further monetary moves.

The central bank's projections suggest the possibility of one or two rate cuts by year's end, contingent upon economic developments.

This outlook underscores the Fed's readiness to adjust its policy to support economic stability, particularly in light of potential headwinds from ongoing trade disputes.

Fed Chair Jerome Powell emphasized the importance of monitoring incoming data to assess the impact of trade policies on inflation and growth. He reiterated the Fed's commitment to its dual mandate of fostering maximum employment and maintaining price stability, indicating that policy adjustments would be data-driven.

The Fed's cautious approach reflects uncertainties surrounding trade tensions and their potential to disrupt supply chains, increase prices, and dampen economic growth.

By holding rates steady while signaling openness to future cuts, the Fed aims to navigate these challenges and sustain economic expansion.