The US Federal Reserve has maintained interest rates despite forecasts indicating slower economic growth and rising inflation due to tariffs. The central bank, known as the Fed, kept rates unchanged even after President Donald Trump criticized its chair, Jerome Powell, calling him a “stupid person” earlier this week. Trump humorously questioned whether he could appoint himself to the Fed, claiming he would perform better than current officials. Despite appointing Powell in 2017, Trump has repeatedly expressed frustration over the Fed’s reluctance to lower borrowing costs via interest rate cuts. Powell refrained from responding to these comments during his press conference. The Fed’s updated projections now indicate inflation could reach 3.1% in 2025, up from the previous estimate of 2.5%, while economic growth forecasts have been revised down to 1.4% from 2.1%. Powell explained that the full impact of import taxes will take time to affect consumer prices. Although uncertainty remains high, it has decreased since Trump announced many tariffs in April. Some country-specific tariffs have been paused for 90 days, set to expire on July 8. Despite challenges, Powell described the US economy as being in a “solid position.” Interest rates were held steady at a range of 4.25%-4.5%. A slowdown in the US economy could influence the UK, given that the US is its largest trading partner.
— new from Sky News
