Federal Reserve flags economic risks amid tariff-driven inflation pressure
(MENAFN) The U.S. Federal Reserve’s minutes, released Wednesday, revealed that central bank officials are increasingly concerned about downside risks to employment and economic growth, alongside rising inflationary pressures.
During its last policy meeting, the Fed maintained the federal funds rate within the 4.25% to 4.50% range, as expected. However, the minutes highlighted growing uncertainty over the economic outlook, as perceived by bank officials.
According to the minutes, "Participants generally saw increased downside risks to employment and economic growth and upside risks to inflation while indicating that high uncertainty surrounded their economic outlooks."
The report also noted that information from businesses and multiple surveys pointed to declining confidence among households and companies, largely driven by uncertainty over government policies. Some Fed officials warned that this uncertainty could weigh on consumer spending, business hiring, and investment.
Inflation concerns were further underscored, with the minutes stating that price levels may rise this year due to elevated tariffs. However, the potential scale and duration of the impact remain unclear.
Some officials observed that the recently announced or proposed tariff hikes were more extensive than expected by many in the business community.
"In discussing the outlook for monetary policy, participants remarked that uncertainty about the net effect of an array of government policies on the economic outlook was high, making it appropriate to take a cautious approach," the minutes added.
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