US Fed Holds Rates Again and Warns of Increased Uncertainty

The U.S. Federal Reserve paused interest rate cuts again on Wednesday and noted an increase in economic uncertainty, as it navigates an economy unnerved by President Donald Trump's stop-start tariff rollout.

Policymakers voted to hold the U.S. central bank's key lending rate at between 4.25% and 4.50%, the Fed announced in a statement.

They also cut their growth forecast for 2025 and hiked their inflation outlook, while still penciling in two rate cuts this year -- in line with their previous expectations in December.

The Fed's vote was not unanimous, with one governor rebelling in opposition to his colleagues' decision to slow the pace at which the Fed shrinks the size of its balance sheet.

Since taking office in January, Trump has ramped up levies on top trading partners Canada, China and Mexico -- only to roll some of them back temporarily -- and threatened to impose reciprocal tariffs on other countries.

Many analysts fear Trump's economic policies could push up inflation, hamper economic growth and complicate the Fed's plans to bring inflation down to its long-term target of 2% while maintaining a healthy labor market.

Until recently, hard economic data had pointed to a fairly robust American economy.

But the mood has shifted in the weeks since Trump returned to the White House, with inflation expectations rising and financial markets tumbling.