US Fed kicks of rate meeting with economic fears elevated

WASHINGTON: The US Federal Reserve began a two-day meeting on interest rates Tuesday, with little action expected given the growing fears about economic growth, inflation and trade uncertainty.

The meeting began at 9:00 am in Washington (1300 GMT) as planned, the Fed announced in a statement.

Analysts widely expect the US central bank to hold interest rates at between 4.25 and 4.50 percent, where they have been since December.

Since his return to office in January, President Donald Trump has embarked on a trade war with some of America’s largest trading partners, including Canada and Mexico, spooking financial markets and raising concerns about the health of the economy.

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While Trump and his economic team insist the fears are overblown, consumers and businesses appear wary of the effects of tariffs on inflation, which remains stuck above the Fed’s long-term target of two percent.

Alongside the rate decision on Wednesday, the Fed will also publish its latest economic forecasts, which are published every other rate decision.

The Fed previously predicted two rate cuts in 2025, and for inflation to remain above target this year and next.

Given the economic uncertainty, many analysts expect Fed policymakers to slightly raise their outlook for inflation in 2025, and to lower their predictions for economic growth.

Financial markets see a probability of around 50 percent that the Fed will cut rates by a quarter percentage point by June, according to CME Group data.