A. M. The U.S. Federal Reserve (Fed) decided on wednesday to leave its interest rates unchanged in the range of 4.25% to 4.50%, in line with market expectations. However, the entity warned of an increase in economic uncertainty and revised downward its growth projections for the coming years.
Two months after Donald Trump’s return to the White House, the Fed confirmed its forecast for two rate cuts in 2025. However, it adjusted its growth estimate for next year to 1.7%, down four-tenths of a percent from its previous forecast. It also raised its inflation forecast to 2.7%, reflecting a less optimistic outlook for the economy.
The central bank showed less confidence in the country’s economic strength after two days of meetings. In addition to the reduction in the GDP forecast, the Fed corrected upward its unemployment estimate for 2025, from 4.3% to 4.4%. For 2026 and 2027, it anticipates lower growth, with real GDP increasing by only 1.8% in both years.
Fed Chairman Jerome Powell attributed part of the inflationary pickup to tariffs, noting that goods inflation rose significantly in the first months of the year. Nevertheless, he insisted on the need to cautiously analyze the evolution of the economy before making decisions on future rate changes.
This adjustment in forecasts comes at a key moment for US economic policy, with the market watching for possible moves by the Fed in the coming months. While inflation remains above the 2% target, weaker growth could complicate the central bank’s strategy to balance the economy.
