By Christopher Lugerber
WASHINGTON (AP) — Federal Reserve officials agreed to refrain from interest movements earlier this month, assessing the impact of President Donald Trump’s tariffs on inflation, unemployment and the wider economy.
Nearly all 19 officials attending the Federal Reserve policy meeting felt the risk that “inflation could prove to be more sustained than expected,” according to minutes of the May 6-7 meeting, released Wednesday. Policymakers expressed greater concern about higher inflation than rising unemployment rates, according to the minutes, which showed the main reasons why they left an unchanged rate.
Their decision flew in the face of Trump’s repeated calls to reduce borrowing costs, as in his view there was “no inflation.” The central bank reduced its key rate three times last year to around 4.3%. Federal Reserve staff economists said during the meeting that inflation was “still rising,” minutes showed.
Trump’s tariffs created a dilemma for the Fed as their duties could raise inflation.
“The officials determined that the negative side risk to employment and… the risk of rising inflation has increased, primarily reflecting the potential impact of increased tariffs,” the minutes said.
Since the meeting, many officials have emphasized that the Fed may have to wait a while before making further moves on interest rates.
“There was considerable uncertainty around the evolution of trade policy and it had an impact on the economy, the minutes said.
“Together, (officials) thought that uncertainty about their economic outlook was an unusually rising,” the minutes said.
Original issue: May 28, 2025, 2:18pm EDT
