The Federal Reserve remains cautious about interest rate cuts due to a strong labor market, with no changes expected in their rates on May 7. Last year's rate cuts leave rates between 4.25 and 4.5 percent; however, concerns stem from President Trump's trade policies, which have introduced uncertainty into the economy. Despite a temporary halt on new tariffs, businesses are hesitant to invest, leading to a pessimistic consumer outlook, which poses a risk of reduced spending and potential job losses, complicating the Fed's balancing act between inflation control and economic growth.
The Fed has for months found comfort in a solid labor market, delaying interest rate cuts while assessing the impact of President Trump's policies on the economy.
Despite a pause in tariffs, uncertainty has led businesses to delay investments and hiring, which could jeopardize economic stability and consumer spending.
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