Leaves rates unchanged, flags tariff risks - no rush to cut
The Federal Reserve decided to leave interest rates unchanged as expected, holding the target range at 4.25% to 4.50% for the third consecutive meeting. The unanimous decision by all 12 members reflects a cautious stance amid growing economic uncertainty.
Fedspeak: Less dovish than previously. What makes the tone less dovish this time is the line: “The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.” This shows Fed officials remain cautious about the divergence between resilient hard data and weakening soft data. They are likely to wait for clearer signs of labour market softness and broader hard data deterioration before cutting rates — likely still a few months away. The statement also used “solid” twice to describe the continued expansion of economic activity, specifically noting that “labour market conditions remain solid.” Describing growth as a “solid pace” suggests the Fed sees no urgency to pivot towards cuts.
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