US Federal Reserve keeps benchmark rate unchanged in 4.25-4.5% target range at Jerome Powell-led FOMC meet

The US Federal Reserve, led by chair Jerome Powell, kept benchmark rate unchanged in 4.25-4.5% target range at the FOMCmeet on Wednesday. "The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has increased further.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," the FOMC statement read."Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated," the release read."In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities.The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective," the central bank added.The Federal Reserve was confronted with a challenging decision regarding its response to President Donald Trump's tariff implementation: Should it maintain high interest rates to address inflation, remain inactive, or reduce rates to boost growth and employment?Market observers and financial experts had largely anticipated that the Fed will maintain current rates, adopting a wait-and-see approach to evaluate the economic impact of the new tariffs before implementing any changes.The US central bank operates independently under a Congressional mandate to ensure price stability and optimal employment levels, primarily through adjustments to its key short-term lending rate."It's an unfavorable mix for the Federal Reserve," Nationwide chief economist Kathy Bostjancic had told AFP."They're going to see upward price pressures at the same time when economic growth is slowing," she said. "And then they'll have to put a weight on what do they believe?"Last month, Trump implemented substantial tariffs on Chinese imports and reduced "baseline" duties of 10 percent on products from most nations, leading to several weeks of market volatility.The administration imposed increased duties on numerous trading associates, subsequently halting them until July to allow the United States sufficient time to revise current trade agreements.Recent economic indicators suggest a decline in the first quarter, with both consumers and companies increasing their import purchases before the implementation of new regulations.Simultaneously, employment figures remained near record-low levels, whilst inflation rates moved towards, but stayed marginally higher than, the Federal Reserve's established two percent objective.