The upcoming Federal Reserve monetary policy committee meeting is significant as it is the first since President Trump's trade war initiated. Amid economic uncertainties, including a GDP contraction in Q1, investors expect Fed Chief Jerome Powell to hold off on interest rate cuts, countering Trump's demands. Strong job growth and controlled inflation support this decision, as Powell emphasizes stability over the president's pressures. However, the volatility in trade policies complicates the Fed's dual mission of maintaining maximum employment while ensuring price stability.
Lowering rates would boost the economy, but could affect inflation. The opposite would be worse for employment. At this unclear juncture, the Fed seems to be leaning toward a prudent wait and see policy.
Jerome Powell will maintain the pause in interest rate cuts, a challenge to Trumpâs pressure for a reduction amid trade war-induced economic uncertainty.
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