Federal Reserve officials are worried about the impact of tariffs on inflation and have decided to hold interest rates steady for now, according to meeting minutes released Wednesday. The Federal Open Market Committee unanimously agreed that inflation must come down further before lowering interest rates.
The decision to keep rates unchanged follows three consecutive rate cuts totaling a full percentage point in 2024. Policymakers expressed concern about the impact of President Donald Trump’s tariffs, which could make it harder for inflation to decrease.
Members of the committee noted that the current policy provides time to assess economic conditions before making any additional moves. They would want to see further progress on inflation before considering further adjustments to interest rates.
The president has already introduced some tariffs and recently threatened to expand them, which would take trade policy to another level and increase prices at a time when inflation is still above the Fed’s 2% goal. FOMC members cited “upside risks” to the inflation outlook, including potential changes in trade and immigration policy.
Despite concerns over tariffs and inflation, some officials expressed substantial optimism about the economic outlook, citing an expectation of easing government regulations or changes in tax policies. The Fed’s benchmark overnight borrowing rate is currently targeted between 4.25%-4.5%.
Source: https://www.cnbc.com/2025/02/19/fed-minutes-january-2025-.html