Federal Reserve Holds Steady Amid Trade Tensions and Inflation Woes

The U.S. Federal Reserve is expected to hold interest rates steady for several months despite looming inflation risks from tariff policies. Most economists in a Reuters poll foresee no rate cuts in the short term. Trade issues and fiscal policies continue to fuel economic uncertainty.

The U.S. Federal Reserve is poised to maintain current interest rates for the coming months, according to a Reuters poll of economists. Despite concerns about potential inflation spurred by President Donald Trump's tariffs, nearly all the economists surveyed anticipate that the Fed will refrain from adjusting rates at its upcoming June meeting.

Of the 105 economists polled, 55 percent foresee a rate cut happening in the next quarter, likely in September. The outlook remains unchanged from prior forecasts, largely due to steady labor market conditions. Economists expect the Fed to rely on rhetoric to assert their inflation-fighting capabilities unless significant economic distress arises.

Amid ongoing trade negotiations and heightened trade barriers, expectations for enduring inflation persist. Experts suggest that elevated tariffs, such as the recent hike on steel and aluminum, may lead to sustained inflation until at least 2027, potentially complicating the Fed's monetary policy decisions.

(With inputs from agencies.)