The US Federal Reserve held interest rates steady on Wednesday and policymakers signalled borrowing costs are still likely to fall this year, but slowed the overall pace of expected future rate cuts in the face of estimated higher inflation flowing from Trump’s tariff plans.In new economic projections, policymakers sketched a modestly stagflationary picture of the US economy, with growth slowing to 1.4% this year, unemployment rising to 4.5% by the end of the year, and inflation finishing 2025 at 3%, well above the current level.While policymakers still anticipate cutting rates by half a percentage point this year, as they projected in March and Dec, they slightly slowed the pace from there to a single quarter-percentage-point cut in each of 2026 and 2027 in a protracted fight to return inflation to the central bank’s 2% target. Under the new projections, inflation remains elevated at 2.4% through 2026 before falling to 2.1% in 2027 amid largely stable unemployment. reuters
