Fed will hold the interest rates as Trump's tariffs of cloud economy growth

It is generally expected that the Federal Reserve announces on Wednesday that interest rates are unchanged for the third time in a row, but it is unclear whether an installment will stay on the table this year.

President Donald Trump's expansive tariffs are likely to strengthen inflation, but some FED officials said that the price increases will probably be limited and could be outweighed by a weakening economy.

The governor of Fed, Christopher Waller, said in an interview on April 24 with Bloomberg and said: “It would not surprise me that you may see more layoffs, a heat of the unemployment rate for the future if the big tariffs occur in particular.”

“I would expect more tariff shortcuts, and earlier when I started seeing a serious deterioration on the job market,” he added.

However, the American labor market seems to be in good condition, according to the latest state data, which show that unemployment is still 4.2%. The FED has the task of protecting the labor market in addition to inflation.

Nevertheless, the Wall Street sees an opportunity of 31%that the FED will deliver interest rate cuts in June, with the chances of getting better later a year. In March, Fed cited civil servants in just two interest rate cuts for 2025 after their recent economic forecasts, although this was before Trump's April tariff. Most Fed officials in recent speeches said that the tariffs that had been introduced so far were larger than expected.

The officials of the officials are due at their meeting from June 17th to 18th.