The post Fed holds rates, cites increased risk of setbacks in the labor market, inflation appeared on BitcoinEthereumNews.com.

This is a segment from the Forward Guidance newsletter. To read full editions, subscribe. The Federal Open Market Committee (FOMC) today, as expected, kept interest rates unchanged.  Committee members cited a “stabilized” unemployment rate, “solid” labor market and continued elevated inflation. However, they noted there’s now an increased risk that unemployment and inflation will rise in the coming months.  Stocks were mostly flat on the news. The S&P 500 was up 0.2% on the day, as of 2:30 pm ET. The Nasdaq Composite was trading 0.3% lower.  “If the tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth and increase in unemployment reflecting a one-time shift in the price level,” Fed Chair Jerome Powell said shortly before publication.  The Fed’s focus on the unemployment rate in today’s statement suggests that a so-called “Fed put” (the central bank stepping in to lower rates and prevent a sharp market decline) will not come until — or unless — the labor market starts to deteriorate.  In other words, should tariffs spur significant layoffs, we could be looking at an interest rate cut sooner rather than later.  Committee members did not release projection materials this month, so it’s hard to know how they’re thinking about the impact of new and pending tariffs. In March, FOMC members indicated they still expect two cuts in 2025.  It’s been a tumultuous six weeks for markets since the Fed’s last meeting in March. Stocks whipsawed along with President Trump’s tariff policies at the beginning of April — rising and falling as optimism over trade deals fluctuated.  In the past couple of weeks, though, major indexes have erased their “Liberation Day” losses. As of Tuesday’s close, the S&P 500 was up 0.5% from April 2. The Nasdaq Composite…

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Filed under: News - @ May 7, 2025 8:24 pm