The Blubber

You'd need over $1.6 million in 2025 to have the same spending power you did with $1 million in 2005.

The U.S. Federal Reserve left its benchmark interest rate unchanged on Wednesday, resisting renewed pressure from President Donald Trump to lower borrowing costs, and warning that both inflation and unemployment risks have risen.

The Fed held its key rate steady at 4.3% for the third consecutive meeting, following a trio of cuts late last year. While many economists and market participants still anticipate two or three rate cuts in 2025, Trump’s expansive tariff policies have clouded the economic outlook and complicated the Fed’s decision-making.

It’s rare for the central bank to cite simultaneous risks of rising inflation and unemployment — but that’s exactly the situation economists say Trump’s tariff regime has created. The higher import duties are expected to drive up prices by making foreign goods more expensive, while also threatening jobs as businesses face rising input costs and potential slowdowns.

The result is a difficult balancing act for the Fed, which is tasked with keeping inflation in check while supporting strong employment. Normally, if inflation climbs, the Fed raises rates to cool spending; if unemployment increases, it lowers rates to stimulate the economy. But tariffs are putting pressure on both sides of that equation at once.

Fed Chair Jerome Powell and other central bank officials have signaled they want more time to assess the full impact of Trump’s tariffs — including the 145% duties placed on all imports from China — before making any changes to policy.

This wait-and-see approach could further escalate tensions between the central bank and the White House. In a recent TV interview, Trump again called on the Fed to lower rates and criticized Powell, saying, “He just doesn’t like me because I think he’s a total stiff.” While inflation remains close to the Fed’s 2% target, Trump and Treasury Secretary Scott Bessent argue there’s room to ease policy. The Fed, however, has kept rates elevated after aggressive hikes in 2022 and 2023 to fight inflation.