Fed Holds Interest Rates Steady, But Signals Cuts May Happen This Year

Summary of Recent Economic Activities and Federal monetary policy

1. Economic Development and Policy Overview
   Economic activity has continued to expand at a solid pace, with an unemployment rate remaining low and the labor market progressing smoothly. Inflation remains relatively stable, up to 3% annually, but it has not yet reached the Fed’s target of 2%. The Federal Open Market Committee (FOMC) has decided to keep interest rates unchanged and remain cautious about the effects of proposed tariffs following the critical events of April 2025. However, there are concerns about the timing and extent of rate cuts, particularly following political or economic events.rather than accelerating, rates are expected to remain subdued for at least the next six months.

2. Impact of Tariffs and the Timeless Nature of Inflation
   Although Trump’s tariffs have dataSource than evolution, the U.S.-only affected by changes since April 2025, they are viewed as not likely to drastically impact inflation soon. The FOMC’s outlook is to maintain inflation at 2% and 2% unemployment, consistently aligned with the Fed’s balanced mandate. The central bank’s interest rates are expected to remain unchanged, though uncertainties related to inflation, employment, and global dynamics continue to affect the economy.

3. Consideration of Small Business Lending
   Federal Reserve Chairman Jerome Powell stated monetizing rate cuts, if needed, would alleviate concerns for small businesses. He emphasized that rate reductions would benefit businesses that already have loans, as borrowing costs would diminish, and aid in long-term planning. A reduction from 2% to 4.25% would lower inflation in relevant product categories, including computers and audiovisual equipment.

4. Decision-Making by the Federal Reserve and the FOMC
   The FOMC has trimmed its benchmark federal funds rate target range, executives have stated, while avoiding a transition to stricter policies. The committee continues to closely monitor economic conditions, targeting jobs and inflation at 2% annually, with the target plan extending further to the 2030s. renters are optimistic about the future, with most forecasts seeing positive economic indicators, including workflows improved and economic resilience maintained.

5. Interest Rates and Small Business Financials
   While inflation remains low, small business owners remain optimistic, viewing earnings and sales growth as有利因素. Over the last fiscal year, small businesses have seen overall financial strength, with industries showing strong performance in core areas like electronics and tech. A pivot to debt reduction and enhanced financial stability is promising for the current and future sectors.

6. Global Events and Their Influence
   International events, including the current Iran-I Orlando military conflict, symbolize a shift in international relationships, whereas trade policies like Trump’s tariffs may contribute to broader economic changes. The U.S. has faced volatility, but the Fed predicts residual stability, with muted inflation and robust jobs performance. Despite current instability, the economy remains bullish, to be operationalized in the years ahead.