Fed keeps interest rates unchanged amidst economic uncertainties under Trump administration

The Federal Reserve (Fed), the central bank of the United States, has decided to keep the country's interest rates unchanged, remaining in the range of 4.25% to 4.50% per year.

This unanimous decision, recently announced, is aligned with the financial market's expectations.

This was the second consecutive meeting in which the Federal Open Market Committee (FOMC) chose not to change the interest rate benchmark. In January, the committee mentioned economic uncertainty and attention to risks as justification for its stance.

In addition to reiterating the scenario, the committee stated in the most recent announcement that uncertainties around the economic outlook have increased.

Decisions on U.S. interest rates impact Brazil. When rates remain high, there is greater pressure for the Brazilian basic interest rate, the Selic, to also remain high for a longer period, in addition to impacts on the exchange rate.

This announcement was the second since Donald Trump took office as the President of the U.S. on January 20. However, the scenario has become more challenging since then, due to the tariff war promoted by the president.

Economists and market agents have warned about the impacts in the U.S. of the tariffs applied to other countries, especially against major American trading partners. Some tariffs are in effect, and others have been suspended.

Although Trump's central objective is to prioritize the national industry, charging tariffs on the importation of products increases the cost of items produced in the U.S., which has the potential to increase inflation.

Moreover, the uncertainty resulting from the volatility of tariffs and the president's threats has harmed consumer confidence, raising fears that the world's largest economy may go through a period of economic slowdown, or, in more pessimistic scenarios, a recession.

The FOMC reiterated in its statement that economic activity continued to expand "at a solid pace," with the unemployment rate stabilized at low levels and an equally solid labor market.

Given this scenario, inflation in the U.S. "remains somewhat elevated," as mentioned by the FOMC. In February, the Consumer Price Index (CPI) reached 2.8% over the past 12 months, above the Fed's 2% target.

The FOMC also declared that it "will continue to monitor the implications of incoming information" and that it is "prepared to adjust monetary policy as necessary if risks arise that could impede the achievement of the Committee's goals."