The U.S. Federal Reserve maintains expectations to maintain interest rates steady through the upcoming months because persistent inflation concerns stemming from President Trump’s tariff policies affect the economic outlook according to a Reuters poll.
The surveyed 105 economists unanimously agreed that the Fed would maintain its benchmark rate at 4.25%-4.50% during the June 17-18 meeting except for two economists. The majority of forecasters (55%) predict the Fed will initiate rate cuts during September yet 42% expect no rate reductions until 2025 or later.
The Fed will maintain its current monetary policy because there are no costs to support the inflation-fighting stance according to Jonathan Pingle who serves as UBS chief U.S. economist. The economic outlook remains unclear because Washington continues its intermittent tariff disputes while Trump’s tax-cut bill has caused the federal deficit to expand.
The labor market shows no signs of stress which reduces the Fed’s need to take immediate action. The rise in prices because of trade-related factors has created concerns that inflation might persist at elevated levels. The steel and aluminum tariffs have increased to 50% from 25% while experts predict that consumer price pressures will continue to rise.
The Fed will maintain its current policy stance because it needs clearer signals about trade talks while avoiding premature rate cuts due to political and economic uncertainties.
