The US Federal Reserve (Fed) has decided to keep its key interest rates in the range of 4.25% to 4.50%. In 2025, the central bank has not yet changed the reference rate, after having started the interest rate reduction cycle last September - with the three cuts announced in the meantime amounting to a total of 100 basis points (one percentage point) by the end of the year.

Since US President Donald Trump took office (on January 20), the Fed has opted for a “wait and see” stance (despite pressure from the White House chief), while awaiting more definitive data on the economic impact of the tariffs announced by the White House against its trading partners.

According to the average of the “dot plot” – a quarterly map that shows how each Fed representative estimates changes in key interest rates – the scenario of a 50 basis point reduction in the federal funds rate this year is still on the table, which should be divided into two decisions of 25 basis point cuts.

For the central bank, the uncertainty surrounding the economic outlook is lower, but remains high.

At a press conference following the two-day meeting, Fed Chairman Jerome Powell cited Trump's tariffs as a key reason the economic outlook is uncertain.

Powell also mentioned the ongoing conflict between Israel and Iran, which has sent oil prices soaring, sparking widespread fears of new inflationary pressures – earlier this week, Bundesbank President Joachim Nagel warned of the risks of an oil price shock and urged the Eurozone not to ease monetary policy, despite inflation having returned to 2%.

According to the Fed chairman, US involvement in the Israel-Iran conflict would shake up financial markets, as rising oil prices and rising inflation would disrupt the global economy and remittances.