The US central bank held interest rates as it said Trump tariffs have risked higher inflation and unemployment amid “so much” uncertainty.
The announcement is likely to anger President Donald Trump, who has made the taxes on imports one of his signature policies and had threatened to fire the Federal Reserve chair, Jerome Powell.
On Wednesday, the Federal Reserve, known as the Fed, held rates at 4.25%-4.5%. Unlike the UK, the US interest rate is a range to guide lenders rather than a single percentage.
It means borrowing costs have remained unchanged for Americans, something Mr Trump had wanted to reduce.
Interest rates have been raised by the Fed to bring down high inflation in the wake of Russia’s invasion of Ukraine and the supply chain crisis brought about by COVID-19 lockdowns.
Fears of inflation rising higher as tariffs make goods on US shelves costlier, and of job losses from reduced spending, led the Fed to remain cautious.
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The full effect of the tariffs is “highly uncertain”, Mr Powell said on Wednesday evening, as those announced so far have been “significantly larger” than anticipated.
Image: US Federal Reserve Chair Jerome Powell speaks during a news conference. Pic: Reuters
A 90-day pause was announced on the suite of taxes Mr Trump imposed on countries across the world, on top of the 10% base tariff, which has remained in place.
A trade war was kicked off between China as the countries escalated tariffs on each other to nearly 150%. Taxes on cars and some metals entering the US are still subject to a 25% tax.
If these tariffs remain, Mr Powell made the strongest statement yet that goods overall would become more expensive.
“If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment,” he said.
“The effects on inflation could be short-lived, reflecting a one-time shift in the price level. It is also possible that the inflationary effects could instead be more persistent,” he added.
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Trump’s tariffs: What you need to know
Uncertainty over the economic outlook also caused consumer and business sentiment to fall, “largely reflecting trade policy concerns”, Mr Powell said.
Despite Mr Trump appointing Mr Powell to the Fed chair position during his first term, the president has repeatedly spoken out against Mr Powell.
Markets rallied after Mr Trump ruled out ousting Mr Powell at the end of April.
It comes as the UK central bank, the Bank of England, is poised to cut interest rates on Thursday afternoon. The base rate is anticipated to drop to 4.25% before falling to 3.5% by the end of the year.
Donald Trump has announced he will award Rudolph Giuliani the Presidential Medal of Freedom, a day after the former New York mayor and political ally was seriously injured in a traffic accident.
The medal is the nation’s highest civilian honour.
In a statement on social media on Monday, Mr Trump described Mr Giuliani as “the greatest mayor in New York City’s history and an equally great American patriot”.
Mr Giuliani has been celebrated for his leadership after the September 11 attacks but has also drawn controversy for his strong support of Mr Trump.
As the president’s lawyer, he became a central figure in efforts to overturn the 2020 election.
Image: Rudy Giuliani attended Donald Trump’s inauguration ceremony in January. Pic: Julia Demaree Nikhinson/Pool via Reuters
He suffered “a fractured thoracic vertebrae, multiple lacerations and contusions, as well as injuries to his left arm and lower leg”, according to Michael Ragusa, Mr Giuliani’s head of security.
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His vehicle was struck from behind while driving on a highway near Manchester, New York, on Saturday evening.
“He sustained injuries but is in good spirits and recovering tremendously,” Mr Ragusa said in a statement on X, adding: “This was not a targeted attack.”
Mr Giuliani was in a rental car and “no one knew it was him”, according to Mr Ragusa.
Image: Rudy Giuliani has drawn controversy over his efforts to overturn the 2020 election. Pic: Ted Shaffrey/AP
His head of security said the former mayor had been “flagged down by a woman who was the victim of a domestic violence incident” and contacted police on her behalf. The crash was “random and unrelated” to the domestic violence incident, Mr Ragusa said.
Mr Giuliani, 81, is expected to be released from hospital in a few days.
His son, Andrew Giuliani, thanked people for reaching out after hearing about his father’s accident, writing on X: “Your prayers mean the world.”
“As a son, I can tell you that I’m honored to have a Dad that I can call the toughest SOB I’ve ever seen,” he added.
Turbulent years
The crash on Saturday comes after several turbulent years for Mr Giuliani, who earned the nickname “America’s mayor” for his leadership in New York following the9/11 attacks in 2001.
He sought the Republican nomination for the 2008 presidential election but ultimately dropped out and endorsed John McCain.
However, Mr Trump’s legal team lost numerous lawsuits alleging fraud, and multiple recounts, audits, and reviews of the 2020 election uncovered no evidence of significant wrongdoing or error.
Two Georgia election workers won a defamation lawsuit against Mr Giuliani after he falsely accused them of helping to rig the presidential election. He was ordered to pay $148m (£118m) in damages.
A man has been found dead “in a pool of blood” at the Burning Man festival in Nevada, officials say.
The man’s body, described as a white adult, was found “lying on the ground” after 9pm on Saturday at the art and music festival in the Black Rock Desert, roughly 110 miles north of Reno, the Pershing County Sheriff’s Office said.
They said he was discovered while the festival’s large wooden effigy of a man at the centre of the festival was engulfed in flames – a tradition during the annual event.
Officials said a festival goer flagged down a sheriff’s deputy and reported seeing “a male subject lying in a pool of blood”.
The sheriff’s office set up a perimeter at the scene and has been treating it as a homicide, interviewing several participants.
The body, which has not been identified, was taken to a medical examiner’s office, while the festival continues until 6pm local time on Monday (2am Tuesday UK time).
“Although this act appears to be a singular crime, all participants should always be vigilant of their surroundings and acquaintances,” the sheriff’s office said.
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Officials say the crime scene is being preserved, but that the case is a “complicated investigation” as the makeshift Black Rock City where the event is located will be gone by the middle of the week.
Burning Man organisers said they were cooperating with law enforcement and asked participants not to interfere with their investigation.
“The safety and well-being of our community are paramount,” their statement said, adding that support services, including a crisis support team, were available and participants had access to free Wi-Fi if they need to communicate with loved ones.
Burning Man is a celebration of self-expression that culminates in the ceremonial burning of its towering 40ft effigy.
Its origins can be traced back to the incineration of an eight-foot wooden “man” on San Francisco’s Baker Beach in 1986, which eventually evolved into an annual gathering in the Black Rock Desert.
Another week, another mass shooting in the US – a country with more guns than people.
Will anything stop the annual mass murder of sons, daughters, mothers, and fathers by firearm?
Martha Kelner speaks to a survivor of the 2016 Pulse nightclub mass shooting that killed 49 people. And then she speaks to one of the most conservative politicians in the country – who wants more guns in circulation and doesn’t feel gun laws are loose enough.