As was expected—even by President Trump, who has been pushing hard for rate cuts—the Federal Reserve held its key interest rate steady on Wednesday. The central bank kept the rate in a range of 4.25% to 4.5%. It has been at the same rate since December, and with the Fed's inflation target potentially at risk from tariffs and other Trump policies, investors aren't expecting a rate cut until September at the earliest, reports Reuters. The Fed indicated that two more rate cuts are still expected this year, though seven of the 19 officials involved indicated that they wanted no rate cuts this year; that's up from four in March, CNBC reports.
The Fed indicated that just one rate cut is likely next year instead of the two it projected at its March meeting. The central bank said the economy is expanding at a "solid pace" but projected that inflation, which was at 2.1% in April, will rise to 3% by the end of the year, the AP reports. The Fed projected that the unemployment rate will rise to 4.5% from the current 4.2%.
Earlier Wednesday, Trump renewed his criticism of Fed chair Jerome Powell, calling him "stupid" and calling for a massive rate cut of up to 2.5 points. Inflation in recent months has been tamer than expected, but Moody's Analytics chief economist Mark Zandi says that with uncertainty remaining about the effect of tariffs, the Fed's wait-and-see approach is "exactly" the right move. "It just doesn't make sense for the Fed to be cutting rates," Zandi tells CNN. "All the forecasts suggest that inflation is going to rise." (More Federal Reserve stories.)