Payam Javan: The Federal Reserve has decided to keep its benchmark interest rate steady at 4.25% to 4.50%, pointing to substantial economic uncertainties driven by recent policy shifts, such as trade tariffs and fiscal changes under President Donald Trump’s administration. Fed Chair Jerome Powell stressed the importance of gaining a clearer understanding of these policies’ effects before adjusting monetary strategy. As a result, the Fed has updated its 2025 outlook, reducing its GDP growth forecast to 1.7% from an earlier 2.1% and raising its inflation projection to 2.7%, largely due to expected tariff-related pressures.

Following the Fed’s statement, U.S. stock markets saw notable gains. The S&P 500 climbed 1.1%, the Dow Jones Industrial Average gained around 380 points (0.9%), and the Nasdaq Composite advanced 1.4%. This upbeat market response highlights investor confidence in the Fed’s prudent stance amid ongoing uncertainties. Still, the central bank remains on guard, striving to manage inflation while fostering economic stability in an environment shaped by evolving policies and trade dynamics.