By Chad Roope, CFA ®, Chief Investment Officer As expected, the Federal Reserve announced it would maintain the Federal Funds rate range at 4.25% to 4.5% on May 7, 2025, marking the third consecutive meeting without a change. This decision reflects the central bank’s cautious stance given current economic uncertainties, particularly those stemming from recent trade and tariff policies implemented by the Trump administration. In its official statement, the Federal Open Market Committee (FOMC) highlighted increased risks to both sides of its dual mandate: maximum employment and price stability. The committee noted that while overall U.S. economic output appears solid; unemployment numbers are low and inflation data from March cooled some, the outlook for employment and price stability has become more uncertain due to trade policy developments. During the subsequent press conference, Fed Chair Jerome Powell elaborated on these concerns, emphasizing that the recent tariffs could lead to higher inflation and slower economic growth. He pointed out that the first quarter GDP had edged down, partly due to businesses accelerating imports ahead of anticipated tariffs, which complicated economic assessments. Powell also addressed the potential for stagflation – a scenario characterized by rising inflation and unemployment coupled with stagnant demand. He acknowledged that if the tariffs remain in place, they could delay progress on reducing in