The US federal reserve is likely to keep interest rates unchanged Wednesday after concluding its latest policy meeting, as officials weigh the impact of tariffs on inflation and assess broader economic signals.The central bank has maintained the benchmark lending rate at 4.25–4.50 per cent throughout the year. Analysts believe policymakers will continue with this cautious stance until inflation shows clear signs of cooling.While US President Donald Trump has imposed 10 per cent tariffs on most US trading partners and higher levies on steel, aluminum, and automobiles, these moves have yet to push up consumer prices significantly. This limited impact is partly due to delayed implementation of some tariffs and businesses relying on existing inventory to avoid immediate price hikes.In May, the consumer price index rose to 2.4 per cent year-on-year, slightly higher than April’s 2.3 per cent, suggesting that tariff effects have not fully materialised.Economists warn that it may take months for the full impact of tariffs to be reflected in consumer prices. As a result, the Fed is taking a “wait-and-see” approach to interest rate decisions.“The Fed would no doubt be cutting again by now if not for the uncertainty regarding tariffs and a recent escalation of tensions in the Middle East,” said KPMG senior economist Benjamin Shoesmith. Policymakers are also focused on keeping inflation expectations “anchored”. If consumers and businesses begin to anticipate higher prices, inflation could become self-reinforcing through increased wage demands and higher costs.On Wednesday, the Fed will also release updated economic projections covering GDP growth, unemployment, and inflation. Analysts are watching to see whether the Fed still expects two rate cuts this year.Despite repeated calls from Trump for lower interest rates, including public criticism of Fed chair Jerome Powell, officials have reiterated the Fed’s independence and commitment to data-driven decision-making.Trump has argued that rate cuts would help reduce interest payments on government debt, but economists point out that lower rates typically increase consumer prices.Dan North, senior economist at Allianz Trade North America, said Powell is unlikely to be swayed by political pressure, citing continued consumer spending and job creation. “Certainly, the health of the economy doesn’t beg for the Fed to cut rates,” he said, “so we think they’re on hold till the end of the year.”