Fed Expected to Hold Rates Amid Tariff Uncertainty, Futures Indicate Rate Cuts

The Federal Reserve is widely expected to maintain current interest rates. This decision comes as President Trump's tariffs introduce uncertainty into the economic outlook. The tariffs have impacted both consumer and business sentiment, particularly in manufacturing. Fed Fund futures now suggest four rate cuts by the end of 2025. This would bring the terminal rate down to approximately 3.31 percent. Policymakers had previously projected two rate cuts for this year. Economists anticipate tariffs to increase both inflation and unemployment. The U.S. economy contracted at an annualized rate of 0.3 percent in the first quarter of 2025. Investor focus will be on Fed Chair Jerome Powell's comments for insights into future rate adjustments.