The U.S. Federal Reserve left its benchmark interest rate unchanged on Wednesday at 4.25%–4.50%, while maintaining its projection for two rate cuts by the end of 2025.
However, Fed Chair Jerome Powell warned that the economic outlook is becoming increasingly uncertain due to rising inflation pressures, particularly from planned import tariffs.
Powell emphasized the data-dependent nature of future decisions, noting that although recent inflation readings have improved, the Trump administration’s tariff agenda could reverse that progress.
“Everyone that I know is forecasting a meaningful increase in inflation in coming months from tariffs,” Powell said.
“Ultimately, the cost of the tariff has to be paid, and some of it will fall on the end consumer,” he added.
Inflation, Growth Revised
The Fed now projects:
Despite holding rates steady for now, policymakers expect to cut rates by a total of 0.5% points in 2025, consistent with earlier forecasts, followed by smaller cuts into 2026 and 2027. However, seven out of 19 Fed officials now see no cuts needed this year — a sign of growing internal division.
Tariffs Driving Uncertainty
Powell attributed much of the revised inflation outlook to Trump’s proposed tariffs, set to begin as early as next month. While the full impact is not yet known, Powell said the Fed is prepared to “wait a couple of months” to evaluate how the cost burden is passed through the economy.
Political Tensions
Trump, who has pressured the Fed for deep rate cuts, reacted sharply to the decision, calling Powell “stupid” and suggesting he should install himself as Fed Chair. The Fed’s independence remains a cornerstone of its policymaking, and officials have repeatedly said their focus is solely on meeting inflation and employment targets.
Markets Steady
Despite the Fed's warnings, markets reacted calmly. Stock indexes were flat, the 10-year Treasury yield was steady, and futures pricing continued to point to September as the likely window for the next cut.
Powell added that geopolitical risks — including the ongoing Israel-Iran conflict — are being closely monitored. However, he said energy price shocks tend to be temporary and are unlikely to shift policy unless sustained.
“We are well positioned to wait to learn more about the likely course of the economy,” Powell said.
Outlook
The Fed remains cautious but open to easing if inflation moderates or the economy weakens further. However, tariff-related cost pressures and geopolitical uncertainty could complicate the timing and extent of rate cuts in the months ahead.
Israel’s sweeping surprise attack on Iran last week marked a major escalation in tensions, with Israeli Prime Minister Benjamin Netanyahu declaring it had “struck at the head of Iran’s nuclear weaponization program.”
Kremlin spokesman Dmitry Peskov said Thursday that Ukraine “will have to understand and accept” the post-war realities, as Moscow signals openness to a third round of peace negotiations with Kyiv.
Israel has confirmed it carried out airstrikes on Iran’s only operational nuclear power plant in Bushehr, marking a significant escalation in the ongoing conflict.
European foreign ministers are set to meet Iran’s top diplomat in Geneva for urgent nuclear talks amid growing fears that the Israel-Iran conflict could spiral into a broader regional war.
Israel is reportedly pressuring the United States to use its most powerful non-nuclear weapon—the GBU-57A/B Massive Ordnance Penetrator (MOP)—in a strike against Iran’s heavily fortified Fordow Fuel Enrichment Plant, as tensions mount in the Middle East.
Israel’s sweeping surprise attack on Iran last week marked a major escalation in tensions, with Israeli Prime Minister Benjamin Netanyahu declaring it had “struck at the head of Iran’s nuclear weaponization program.”
Kremlin spokesman Dmitry Peskov said Thursday that Ukraine “will have to understand and accept” the post-war realities, as Moscow signals openness to a third round of peace negotiations with Kyiv.
Israel has confirmed it carried out airstrikes on Iran’s only operational nuclear power plant in Bushehr, marking a significant escalation in the ongoing conflict.
European foreign ministers are set to meet Iran’s top diplomat in Geneva for urgent nuclear talks amid growing fears that the Israel-Iran conflict could spiral into a broader regional war.
Israel is reportedly pressuring the United States to use its most powerful non-nuclear weapon—the GBU-57A/B Massive Ordnance Penetrator (MOP)—in a strike against Iran’s heavily fortified Fordow Fuel Enrichment Plant, as tensions mount in the Middle East.
Peace is no longer a dream. It is a discussion. On the streets of Baku and Yerevan, it is also a question, of trust, of foreign interests, and of who truly wants it.
Israeli strikes have reportedly targeted areas near the residences of Iran’s Supreme Leader Ayatollah Ali Khamenei and President Masoud Pezeshkian, according to the New York Times, citing local witnesses.
Azerbaijan Airlines (AZAL) has cancelled certain flights scheduled for 13th and 14th June amid recent escalation of situation in the Middle East and the closure of airspace in several countries for security reasons.
The 2025 G7 Leaders’ Summit was held June 15–17 in Kananaskis, Alberta, under Canada’s presidency. Prime Minister Mark Carney framed the meeting around priorities of protecting communities, energy and climate security, the digital transition, and future partnerships.
Start your day informed with AnewZ Morning Brief: here are the top news stories for June 17th, covering the latest developments you need to know.
Iran's foreign minister is expected in Istanbul on Saturday for a key Organisation of Islamic Cooperation (OIC) council meeting as regional tensions rise over Israel's strikes on Iranian nuclear sites.
The US Embassy in Qatar has temporarily barred its personnel from entering Al Udeid Air Base due to rising regional tensions linked to the ongoing conflict between Israel and Iran.
The World Bank has approved a $640 million loan to Bangladesh to help improve gas supply security and reduce dangerous air pollution in urban areas.
Kremlin spokesman Dmitry Peskov said Thursday that Ukraine “will have to understand and accept” the post-war realities, as Moscow signals openness to a third round of peace negotiations with Kyiv.
Israel has confirmed it carried out airstrikes on Iran’s only operational nuclear power plant in Bushehr, marking a significant escalation in the ongoing conflict.
Israel’s sweeping surprise attack on Iran last week marked a major escalation in tensions, with Israeli Prime Minister Benjamin Netanyahu declaring it had “struck at the head of Iran’s nuclear weaponization program.”
Kremlin spokesman Dmitry Peskov said Thursday that Ukraine “will have to understand and accept” the post-war realities, as Moscow signals openness to a third round of peace negotiations with Kyiv.
Israel has confirmed it carried out airstrikes on Iran’s only operational nuclear power plant in Bushehr, marking a significant escalation in the ongoing conflict.
European foreign ministers are set to meet Iran’s top diplomat in Geneva for urgent nuclear talks amid growing fears that the Israel-Iran conflict could spiral into a broader regional war.
Israel is reportedly pressuring the United States to use its most powerful non-nuclear weapon—the GBU-57A/B Massive Ordnance Penetrator (MOP)—in a strike against Iran’s heavily fortified Fordow Fuel Enrichment Plant, as tensions mount in the Middle East.
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