Fed Rates Pause, USIP Loses Case, Israel Restarts Gaza Ground Invasion
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How did the Federal Reserve respond to inflation concerns?
The Federal Reserve is warning that inflation is coming as it held interest rates steady.
Clearly some of it, a good part of it, is coming from tariffs. President Trump doesn't like it.
He wants the Fed to lower rates.
I'm Leila Faudel, that's A. Martinez, and this is Up First from NPR News. A federal judge says Doge probably terrorized people when they forced their way into the U.S. Institute of Peace. But while she found the way American citizens were treated offensive, she denied a request to stop the dismantling of the agency. We tell you why.
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Why is President Trump advocating for rate cuts?
We go to the story and take you along with us wherever you get your podcasts.
The Federal Reserve is warning that President Trump's new tariffs could hurt the U.S. economy.
The central bank on Wednesday cut its economic growth forecast and raised its expectations for inflation. Fed Chair Jerome Powell said that tariffs are playing a role in inflation.
Clearly some of it, a good part of it, is coming from tariffs.
President Trump said later on social media that the Fed, an independent agency, should lower rates as tariffs set in.
NPR financial correspondent Maria Aspin joins us now to explain. So Maria, President Trump often called on Jerome Powell to lower rates in his first term. So why then and why now?
Well, the Fed's interest rates set the bar for what consumers pay for all kinds of loans. Cars, credit cards, business loans, and lower rates mean, in general, lower loan prices for consumers. But yesterday, the Fed did exactly what had been expected. It held interest rates steady. And it also signaled that it's still on track to cut interest rates twice later this year. That said, a lot has changed in the last several weeks. President Trump has been implementing a very aggressive and very chaotic trade policy with these on-again, off-again tariffs against some of the country's largest trading partners. We've seen all this uncertainty hit consumers and businesses and stock market investors. And now the Fed is also saying that, yeah, it's dealing with more uncertainty around the economic outlook. The Fed isn't taking any major action yet, but it did say yesterday it's now expecting the economy to grow more slowly this year than it previously projected and inflation to grow faster.
But why isn't the Fed taking more action?
It says the underlying economy is still strong, unemployment remains low, and prices are still relatively stable compared to a couple of years ago. This is Chair Powell yesterday.
We will be watching very carefully for signs of weakness in the real data. Of course we will. But given where we are, we think our policy is in a good place to react to what comes, and we think that the right thing to do is to wait here for greater clarity about what the economy is doing.
Now, the Fed's job is to take the long-term view and to be steady. That becomes even more important in an uncertain environment. And Powell is also trying to maintain the Fed's independence from the White House at a time when President Trump wants to exert more control over independent agencies. So Powell is threading this needle of doing what's best for the overall economy.
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