The FOMC held rates steady at its May meeting, keeping its target rate in a range of 4.25 to 4.5%. In its statement, the committee cautioned that the "uncertainty about the economic outlook has increased further" and that "swings in net exports have affected the data," however, "recent indicators suggest that economic activity has continued to expand at a solid pace."
Yahoo Finance Federal Reserve Reporter Jennifer Schonberger reports the breaking details.
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No change. The Fed Reserve holding rates steady in the range of 4 and a quarter to 4 and a half percent for the third straight meeting, even as President Trump has hammered the Central Bank to cut rates. Officials say the economic outlook, uncertainty around the economic outlook has increased further even as they still see the economy having expanded at a solid pace even as net exports really swung the economic data. Of course, first quarter GDP contracted for the first time in three years as importers rushed to import goods ahead of the president's tariffs. Now, officials expressed concern that the risks of employ, higher unemployment and higher inflation have risen, but at the moment, policy makers still judge the labor market to be solid, saying that the unemployment rate has stabilized at a low level in recent months. Officials still see inflation as quote, somewhat elevated. This decision was unanimous. However, Kansas City Fed president, Jeff Schmidt was not present for this meeting because of the death of his wife and in his absence, Minneapolis Fed president, Neil Kashkari voted. Guys.
Jennifer, thank you very much. Appreciate it. So, um, not any surprise in terms of the decision to hold rates steady here and I'm just starting to go through the statement itself to see, um, what have been the changes here from, uh, the Federal Reserve. Um, but obviously, the focus continues to be on the dual mandate and where we might start to see changes on those dual parts of the mandate in terms of employment and inflation.
And the truth is, Julie, is we're just talking about so much of what happens next for the Fed and for the economy. It of course does rest with the president. I mean, what is President Trump's next move? Is he willing to really accept kind of worst case adverse economic scenario? Is it or is there some type of bright line in the sand where he's not willing to accept that and then you would see some type of resolution on all the trade and tariff we discussed? That's the background.
Yeah, and we're going to go back to Jen for a moment. Jennifer Schaumberger, um, what else are you noticing here from the statement?
Yeah, Julie, what was interesting to me is the Fed opted to hold rates steady, and the reason for that is they still view the economy and the job market as solid right now. Inflation's somewhat elevated. It's the risks to the outlook around their dual mandate that lays the question for the policy path forward, right? They see the risks for higher unemployment and for higher inflation now more elevated than they did previously. Uncertainty around the economic outlook has also increased further, but clearly looking at the hard data right now, everything looks okay. Thus, no movement rates.
Jen, thank you. Appreciate.