Fed Sees Tariffs Raising Inflation, Key Rate Unchanged – RVBusiness – Breaking RV Industry News
WASHINGTON — The Federal Reserve kept its benchmark interest rate unchanged last week and signaled that it still expects to cut rates twice this year even as it sees inflation staying stubbornly elevated, according to an Associated Press report.
The Fed also now expects the economy to grow more slowly this year and next than it did three months ago, according to a set of quarterly economic projections also released Wednesday. It forecasts growth falling to just 1.7% in 2025, down from 2.8% last year, and 1.8% in 2026. Policymakers also expect inflation will pick up slightly, to 2.7% by the end of this year from its current level of 2.5%. Both are above the central bank’s 2% target.
Even though the Fed maintained its forecast for two cuts, economists noted that under the surface there were signs that the central bank could stay on hold for some time. That is likely to keep borrowing costs for mortgages, auto loans, and credit cards unchanged in the coming months.
Fed Chair Jerome Powell, at a news conference, said that President Donald Trump’s tariffs have started to push up inflation and would likely stall the progress the central bank has seen in reducing inflation since its peak in 2022.
Click here to read the full Associated Press report.
