Fed Chair Signals Interest Rates Will Remain On Hold Amid Economic Uncertainty

The Federal Reserve is expected to keep its key interest rate unchanged in the coming months as it navigates widespread economic uncertainty driven by President Donald Trump’s policies, Fed Chair Jerome Powell said at a conference in New York, Associated Press (AP) reported.

Powell’s remarks led some traders to scale back their expectations for multiple interest rate cuts this year. I Photo: Board of Governors of the U.S. Federal Reserve Facebook

Powell noted that the Trump administration is implementing significant policy changes in multiple areas, including trade, taxes, government spending, immigration, and regulation.

He emphasized that the overall economic impact of these shifts will shape the Fed’s approach to interest rates.

“While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their likely effects remains high,” Powell said.

“As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves. We do not need to be in a hurry and are well positioned to wait for greater clarity.”

Many economists warn that Trump’s proposed tariffs—such as the 25% duties on Canadian and Mexican imports, which he partially delayed on Thursday—could drive up prices and slow economic growth.

However, they also acknowledge that tax cuts and deregulation could provide an economic boost.

Powell’s remarks led some traders to scale back their expectations for multiple interest rate cuts this year.

Markets had previously priced in at least three rate reductions following a series of weaker-than-expected economic reports. However, Powell reiterated that the Fed is in no rush to adjust rates, a stance that pushed Treasury yields higher in the bond market.