Fed keeps rates steady but pencils in two cuts this year

The US central bank held interest rates steady on Wednesday and policymak-ers signaled borrowing costs are still likely to fall in 2025, but US Federal Reserve Chair Jerome H. Powell cautioned against putting too much weight on that view, and said he expects “meaningful” inflation ahead as consumers pay more for goods due to the Trump administration’s planned import tariffs.

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“No one holds these ... rate paths with a great deal of conviction, and everyone would agree that they’re all going to be data-dependent,” Mr. Powell said in a press conference after the end of a two-day US central bank meeting where policymakers slowed their overall outlook for rate cuts in response to a more challenging outlook of weaker economic growth, rising joblessness, and faster price increases.

If not for tariffs, Mr. Powell said, rate cuts might actually be in order, given that recent inflation readings have been favorably low.

But a cost shock is coming, he insisted, with producers, manufacturers and retailers still involved in a complicated struggle over who will pay the levies imposed so far, and President Donald J. Trump still contemplating an aggressive set of import duties that could go into effect early next month.