Federal Reserve cuts US growth forecast as Trump tariff fears increase – BBC.com

The US central bank has cut its growth forecast as it warned President Donald Trump’s tariffs were “clearly” driving up prices.

The Federal Reserve released its projections for the world’s largest economy on Wednesday while keeping interest rates unchanged again, saying it wanted to see how the White House policies unfold.

That decision, which was widely expected, kept the Federal Reserve’s benchmark interest rate hovering around 4.3%, where it has stood since December.

After the announcement, Trump, who has previously criticised the central bank, called on it to cut rates.

“The Fed would be MUCH better off CUTTING RATES as US Tariffs start to transition (ease!) their way into the economy,” the US President said on his platform Truth Social.

“Do the right thing. April 2nd is Liberation Day in America!!!”

Earlier, Fed chairman Jerome Powell said the economy still appeared healthy, despite a sharp downturn in sentiment and “remarkably high” uncertainty.

But he warned tariffs – which are taxes on imports – were likely to slow growth and hinder the bank’s efforts to keep prices stable, noting recent data showing a rise in goods prices.

“Clearly some of it, a good part of it, is coming from tariffs,” he said, speaking after the Fed’s rates announcement on Wednesday.

“Progress is probably delayed for the time being,” he added.

Since taking office in January, Trump has announced blitz of new tariffs while also calling for big cuts to taxes, regulation, and government spending.

Economists have long warned that some of those policies could cause prices to rise, at least in the short-term, and raise uncertainty for businesses.

Analysts say the concerns have also helped to drive a sell-off in the stock market, with the S&P 500 falling 10% from February back to levels last seen in September.

Trump has acknowledged there could be “a little disturbance” from his tariffs, but says the policies will lead to long-term growth.