US central bank holds interest rate steady, downgrades economic outlook

As expected, the Federal Reserve — the Fed, the US central bank — kept interest rates unchanged for the fourth consecutive meeting on Wednesday 18, predicting higher inflation and lower growth for this year.

Amid changes in tariff policy by the Donald Trump administration and increased geopolitical uncertainty , the Fed has kept its benchmark interest rate at range from 4.25% to 4.5% at the end of the two-day meeting, although it continues to bet on two reductions by the end of the year.

In a note, the institution reported that “uncertainty about the economic prognosis has decreased, but remains high”, while GDP will grow less and inflation will be higher.

The Fed expects GDP to grow 1.4% this year, compared with a forecast of 1.7% in March and 2.1% in December 2024.

According to the US central bank, inflation will be 3% and not 2.7%, as predicted in March, according to an update of its economic forecasts, presented at the end of the meeting of its monetary policy committee.

The Fed also predicts an increase in unemployment to 4.5%, compared to the 4.4% previously anticipated.