U.S. Fed Set to Hold Rates Steady Amid Inflation And Tariff Uncertainty

The U.S. Federal Reserve is expected to hold interest rates steady following its policy meeting, as officials monitor the effects of tariffs on inflation and weigh pressure from President Donald Trump to cut rates, Beiyi Seow reported for Agence France-Presse (AFP).

The Fed is anticipated to stay cautious until inflation shows sustained signs of cooling.

The central bank has kept its benchmark interest rate at a range of 4.25–4.50 percent throughout 2025, and analysts anticipate the Fed will stay cautious until inflation shows sustained signs of cooling.

While Trump has imposed a 10% tariff on most U.S. trading partners and steeper duties on imports of steel, aluminum, and automobiles, these actions have not yet triggered a major spike in prices.

Businesses have largely relied on existing inventories to cushion the impact and delay passing costs on to consumers.

In May, the Consumer Price Index (CPI) rose to 2.4% year-on-year, up from 2.3% in April, suggesting the immediate inflationary impact of tariffs remains limited. However, economists expect the full effects of the trade actions to emerge over the coming months.

“The Fed would no doubt be cutting again by now if not for the uncertainty regarding tariffs and a recent escalation of tensions in the Middle East,” said KPMG senior economist Benjamin Shoesmith.