The Federal Reserve is tasked with creating a monetary policy that encourages price stability and maximizes employment. As a result, it attempts to keep inflation at around 2% a year because that has been identified as a level that allows consumers and businesses alike to make plans.

President Donald Trump has pushed for the Federal Reserve to lower interest rates by “a full point” in order to juice the economy as inflation hovers close to its target level. But Fed Chair Jerome Powell and his central bank colleagues want to gauge the economic fallout from tariffs before making any moves.

The Fed also forecasted two quarter-point interest-rate cuts over the remainder of 2025, carrying over a prediction issued in March. Two additional quarter-point cuts will be made in 2026, as well as one quarter-point cut in 2027, the central bank said.

Officials are waiting to see if businesses manage higher costs from tariffs by trimming profits or pushing up prices.

The Trump administration is escalating its campaign against Federal Reserve Chair Jerome H. Powell, with a new set of arguments aimed at ousting the central bank leader.

President Donald Trump has frequently voiced dissatisfaction with the Fed’s “wait-and-see" approach to lowering interest rates under Powell.