Daily Fundamental Analysis: Federal Reserve Keeps Interest Rates Unchanged as Expected
Key Takeaways:
The Fed holds interest rates and warns of economic downturn
The UK is nearing a trade deal with the US
Stock markets move sideways as uncertainty sentiment remains
The U.S. Federal Reserve kept rates at 4.25%-4.5%. Powell warned that Trump’s reciprocal tariffs were larger than expected and would likely cause inflation, slower growth, and higher unemployment.
Before Trump’s reciprocal tariffs were announced in March, Fed policymakers anticipated trade barriers’ impact. The FOMC lowered economic forecasts and raised inflation projections, with Powell citing tariffs as a key factor.
At the FOMC meeting yesterday, Powell directly blamed Trump’s tariffs for likely causing inflation, slower growth, and higher unemployment – warning of stagflation risks. Despite this warning, Trump shows no signs of changing course, maintaining his stance on tariffs, including the 145% levy on China.
Britain is reportedly set to sign a trade deal with the U.S., becoming the first country to do so since America’s recent tariff announcements. While Britain faces a 10% baseline tariff, it avoided the higher rates of Trump’s “Liberation Day” duties.
Stock futures were mostly moving sideways on Wednesday evening after the Federal Reserve maintained rates while warning of inflation and unemployment risks. S&P 500 and Dow futures dipped 0.1%, while Nasdaq-100 futures edged lower.
Eastern European allies warn that EU plans to end Russian energy imports by 2027 could be catastrophic for the region. The European Commission’s proposal aims to phase out Russian gas, nuclear energy and LNG imports to achieve energy independence from Russia.
While the EU banned most Russian oil and coal imports after the 2022 invasion of Ukraine, gas reduction has been slower. Russian gas imports fell from 45% in 2021 to 19% in 2024,
