Federal Reserve Downgrades Economic Growth Forecast Amid Rising Tariff Concerns

The Federal Reserve has reduced its growth forecast for the US economy, attributing this adjustment to President Trump’s tariffs which are expected to increase prices. In a recent meeting, the Fed opted to maintain interest rates at 4.3%, prioritizing a wait-and-see approach regarding the impact of current White House policies. Fed Chairman Jerome Powell acknowledged the economy remains broadly healthy but highlighted elevated uncertainty due to tariffs, which are anticipated to hinder growth and challenge efforts to stabilize prices. The revised Fed projections now predict a 1.7% growth rate for 2023, down from an earlier estimate of 2.1%, and inflation rates are expected to rise to 2.7%. Recent data indicates a slowdown in consumer sentiment and a sell-off in the stock market, with the S&P 500 experiencing a 10% decline since February. Analysts warn that the combination of tariffs and changes in consumer behavior could destabilize the economic situation. Despite these concerns, the Trump administration remains optimistic about long-term growth. The Fed’s decision to hold interest rates steady yet indicate a potential cut later in the year reflects a cautious stance in navigating these economic challenges.