The Federal Reserve, on Wednesday, announced it would hold interest rates steady at 4.25% to 4.5% for the third consecutive meeting, emphasizing that heightened uncertainty—not just about inflation or employment, but the entire economic outlook—continues to dominate policymakers’ thinking.
- The Federal Open Market Committee’s (FOMC) statement reflected a subtle but important shift, noting that risks have now increased for both sides of its dual mandate: “The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.”
Powell Presser: Fed Chair Jerome Powell expanded on this theme of pervasive uncertainty in his post-meeting press conference. Responding to CNBC’s Steve Liesman, Powell remarked, “I don’t think we can say, you know, which way this will shake out. I think there’s a great deal of uncertainty about, for example, where tariff policies are going to settle out and also when they do settle out, what will be the implications for the economy, for growth, and for employment. I think it’s too early to know that.”
- While Powell acknowledged that the current policy rate is likely appropriate for the foreseeable future, he repeatedly stressed the Fed’s “wait and see” posture.
Uncertainty Was The Theme: In response to a question from The Wall Street Journal’s Nick Timiraos comparing today’s supply shocks to those in 2021, Powell said, “I think the underlying inflation picture is good…But there’s just so much that we don’t know. I think — and we are in a good position to wait and see, is the thing. We don’t have to be in a hurry. The economy has been resilient. It is doing fairly well. Our policy is well-positioned. The costs of waiting to see further are fairly low, we think.”
- That theme—that the Fed is flying cautiously through foggy conditions—permeated almost all of Powell’s responses. While acknowledging continued economic resilience, he stopped short of projecting any clear path forward, repeatedly citing unknowns ranging from global trade to labor market dynamics.
Trump Effect: Several reporters pressed Powell on political dynamics, especially given President Trump’s recent criticism of Fed policy. Powell refused to be drawn in. “We are always going to consider only the economic data, the outlook, the balance of risks, and that’s it. That’s all we are going to consider,” he said, emphasizing the Fed’s independence.
- When asked why he had not met directly with Trump, Powell stated firmly, “I have never asked for a meeting with any president and I never will. I wouldn’t do that. There’s never a reason for me to ask for a meeting. It’s always been the other way.”
Late To The Party: In a moment that caught the attention of Fed watchers, Powell conceded that the series of rate cuts implemented last fall may not have been as timely as some had hoped. “I wouldn’t say what we did last fall is at all preemptive. If anything, it was a little late,” he admitted.
Bottom Line: While the Fed held rates steady today, the overarching message was clear: policymakers believe they are in a position of strength to pause and observe. But beyond that, Powell offered little in the way of forward guidance—because, as he repeatedly emphasized, the future remains unusually difficult to predict.
