Economists have shifted back their forecasts for lower borrowing costs as President Trump’s tariffs raised the risk of higher inflation and slower growth.

Former Fed president Bill Dudley warned that the central bank risks mistiming interest rate cuts if the economy stumbles into a recession.

Jerome Powell said the Federal Reserve can wait to see which effect from Trump's tariffs is worse - high inflation or a weak economy.

Jerome H. Powell, chair of the Federal Reserve, has made clear that pre-emptive interest rate cuts are not appropriate for the moment.

The Fed will not cut interest rates in June or July, with the first cut now expected in September. Wall Street traders have reduced their expectations from three cuts to just two for 2025. Treasury yields jumped as markets reacted to the Fed’s wait-and-see stance.