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Powell said US negotiations with key trade partners could have a material impact on the economic outlook, after Trump imposed higher than expected tariffs that surprised even the Fed.

“It seems to be we’re entering a new phase where the administration is beginning talks with a number of our important trading partners and that has the potential to change the picture materially — or not,” Powell said. “It’s going to be very important how that shakes out.”

Powell said the tariffs Trump implemented on April 2nd were “substantially larger than anticipated in the forecasts that I had see and in our forecasts.”

Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer are scheduled to meet with Chinese counterparts in Switzerland this weekend. The two largest economies in the world have slapped tariffs on each other that effectively amount to an embargo, Bessent said Tuesday.

Apple Inc. is “actively looking at” revamping the Safari web browser on its devices to focus on AI-powered search engines, a seismic shift for the industry hastened by the potential end of a longtime partnership with Google.

Eddy Cue, Apple’s senior vice president of services, made the disclosure Wednesday during his testimony in the US Justice Department’s lawsuit against Alphabet Inc. The heart of the dispute is the two companies’ estimated $20 billion-a-year deal that makes Google the default offering for queries in Apple’s browser. The case could force the tech giants to unwind the pact, upending how the iPhone and other devices have long operated.

Beyond that upheaval, AI is already making gains with consumers. Cue noted that searches on Safari dipped for the first time last month, which he attributed to people using AI. Cue said he believes that AI search providers, including OpenAI, Perplexity AI Inc. and Anthropic PBC, will eventually replace standard search engines like Alphabet’s Google. He said he believes Apple will bring those options to Safari in the future.

While Fed Chair Jerome Powell acknowledged the U.S. federal debt level “is on an unsustainable path,” he refrained from offering any advice for Congress on the budget.

“I think they don’t need my advice and our advice on how to do fiscal policy, any more than we need their advice,” Powell said during a press conference on Wednesday. “It’s on Congress to figure out how to get us back on a sustainable path.”

President Donald Trump’s call for the Federal Reserve to lower interest rates has no effect “at all” on the Federal Open Market Committee’s job or the way they do it, Fed Chair Jerome Powell said.

“We are always going to do the same thing, which is we are going to use our tools to foster maximum employment and price stability for the benefit of the American people,” he said. “We are always going to consider only the economic data, the outlook, the balance of risks and that’s it. That’s all we are going to consider.”

Powell said he believes the Fed is in a “good position” to see how all the uncertainty surrounding the Trump administration’s tariffs plays out.

“There’s just so much that we don’t know, I think, and we’re in a good position to wait and see, is the thing. We don’t have to be in a hurry. The economy has been resilient. It’s doing fairly well. Our policy is well-positioned. The costs of waiting to see further are fairly low,” Powell said. “I can’t tell you how long it will take, but for now, it does seem like it’s a fairly clear decision for us to wait and see and watch.”

Powell said that if Trump’s tariffs ultimately stay at their current levels, this could delay the U.S. central bank from achieving its mandated goals.

“What looks likely — given the scope and scale of the tariffs — is that we will see certainly the risks to higher inflation, higher unemployment have increased. And if that’s what we do see — if the tariffs are ultimately put in place at those levels, which we don’t know — then we won’t see further progress toward our goals,” he said. “We might see a delay in that.”

Powell specified that this could delay the Fed’s timeline for the next year or so.

“In our thinking, we would never do anything but keep achieving those goals. But we would at least for the next, let’s say year, we would not be making progress toward those goals — again, if that’s the way the tariffs shake out,” he added. “The thing is, we don’t know that. There’s so much uncertainty about the scale, scope, timing and persistence of the tariffs.”

Fed Chair Jerome Powell said the central bank is not looking to cut rates preemptively due to the fact that inflation is still running above target, with forecasts for another potential rise in inflation in the near term.

“It’s not a situation where we can be preemptive, because we actually don’t know what the right responses to the data will be until we see more data,” Powell said.

Powell said it’s “too early” to know which side of the Federal Reserve’s dual mandate of high employment and stable prices is more important. “It’s too early to know that,” he said.

Powell added that the policy rate is in a good spot while the central bank awaits clarity on what President Donald Trump’s tariff policy looks like. He called the Fed’s current monetary policy is only “moderately restrictive” and said that the central bank will continue to monitor economic data.

“The leaves us in a good place to wait and see,” Powell said of current borrowing levels amid uncertainty around tariffs. “We don’t think we need to be in a hurry. We think we can be patient.”

Fed Chair Jerome Powell said that the current announced levels of tariffs could lead to a slowdown in economic growth and a potential rise in long-term inflation.

“If the large increases in tariffs that have been announced are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment. The effects on inflation could be short-lived, reflecting a one-time shift in the price level. It is also possible that the inflationary effects could instead be more persistent,” Powell said.

Fed Chair Jerome Powell sees the Fed policy as appropriate despite the rising threat from President Donald Trump’s tariffs.

“The risks of higher unemployment and higher inflation appear to have risen, and we believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic development,” the central bank leader said during his post-meeting news conference.

The Treasury market edged higher after the Federal Reserve held interest rates steady while emphasising growing risks of higher inflation and rising unemployment.

The gains on Wednesday pushed yields lower by as much as four basis points across maturities, with traders holding tight to their wagers on at least three interest-rate reductions in the rest of 2025. While the first cut is fully priced in for September, traders still see solid odds of a move in July.

The Federal Reserve’s statement “sending a shot across the bow to the administration, saying essentially if you read between the lines, ’Your policies are leading to higher inflation, higher unemployment,” David Kelly, chief global strategist at JPMorgan Asset Management, said in an interview with CNBC’s “Power Lunch.”

“It says, ‘We are not going to be in any hurry to cut rates because honestly there are risks to both sides of our mandate here and we are not sure which way we should be playing this,’” he added.

Donald Trump’s administration is set to shrink the ranks at the top US financial regulators by more than 2,300 workers, a group that includes bank examiners, criminal investigators and economists.

The cuts are the steepest in decades for the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Securities and Exchange Commission, the primary agencies responsible for oversight of banks, trading houses and the public markets.

At the same time, the agencies are rapidly juggling their remaining staff and adjusting policies. The OCC has said it will combine supervision teams that were previously tailored to banks by size, and the SEC has reorganized its regional offices. The FDIC has yet to announce significant changes, but officials are rethinking its approach to bank supervision, according to people familiar with internal discussions.

President Donald Trump said he’s unwilling to preemptively lower tariffs on China in order to unlock more substantive negotiations with Beijing on trade.

“No,” Trump said Wednesday when asked by a reporter if he is open to pulling back his 145% duties on Chinese imports to get the world’s second-largest economy to the negotiating table.

The president’s comments come a day before Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer were set to meet with their Chinese counterpart on trade in Switzerland.

Stocks were little changed Wednesday after the Federal Reserve left its key interest rate unchanged, citing a greater increase in uncertainty around the economic outlook.

The S&P 500 lost 0.5%, while the Nasdaq Composite shed about 1%. The Dow Jones Industrial Average traded 27 points higher, or 0.1%, thanks to a 10% pop in Disney shares. The entertainment giant reported a surprise jump in streaming subscribers.

Stocks rose Wednesday as investors awaited the Federal Reserve interest rate announcement expected later in the day. Traders also monitored the latest updates on U.S. trade negotiations.

The S&P 500 added 0.3%, while the Nasdaq Composite shed 0.1%. The Dow Jones Industrial Average traded 295 points higher, or 0.7%, thanks to a 10% pop in Disney shares. The entertainment giant reported a surprise jump in streaming subscribers.

The US Federal Reserve on Wednesday (May 7) held its key interest rate unchanged as it awaits fluctuations in trade policy and the direction of a sputtering economy.

Shares of crop handler Andersons Inc. slumped to the lowest level in more than two years as uncertainty around tariffs and US port fees upended trade, pressuring first-quarter results.

Importers put off purchases of US grain and oilseeds as President Donald Trump threatened tariffs as well as levies on any Chinese vessels docking at American ports. While tariffs have been paused on some nations and most bulk agricultural cargoes will be exempt from the port fees, the developments still hit the Ohio-based company.

The trade uncertainty “disrupted typical grain flows and negatively impacted commodity values,” Andersons Chief Executive Officer Bill Krueger said Wednesday on a call with investors. “This resulted in limited merchandising activity beyond immediate customer needs.”

The US Federal Reserve’s Financial Stability Report, published in April 2025, noted that asset prices across several markets continue to stay high compared to underlying fundamentals.

The report flagged recent turbulence triggered by announcements on changes to US trade policy, which led to sharp price swings and increased volatility. It attributed this to investor concerns over how long and how far trade disruptions could go, as well as the potential economic slowdown and rising inflation. Despite these headwinds, the Fed said pricing remained elevated across multiple asset classes.

While the Fed has kept its benchmark rate unchanged since December, others are acting to shield their economies from escalating tariff-related risks.

China’s central bank reduced rates as factory production faltered under pressure from newly imposed 145% US tariffs. Europe is also leaning into stimulus with its central bank trimming rates three times this year, citing trade policy volatility as a key concern.

The Bank of England is expected to ease policy at its Thursday meeting, while Bank of Japan took a different path, holding steady this month after a rate hike in January, marking a rare divergence from the global shift toward monetary loosening.

US inflation, as measured by the Consumer Price Index (CPI) for All Urban Consumers, dipped by 0.1% in March 2025, after a 0.2% rise in February, according to data released by the US Bureau of Labor Statistics on April 10.

Core inflation, which excludes food and energy, edged up by 0.1% in March, following a 0.2% increase in the previous month.

On an annual basis, unadjusted CPI inflation stood at 2.4% for the 12 months ending March 2025.

Used car prices in the US surged in April, reaching their highest level since October 2023, as buyers rushed to make purchases ahead of potential tariff-related cost increases, CNBC reported.

Citing data from Cox Automotive, CNBC said the Manheim Used Vehicle Value Index — which measures wholesale used vehicle prices in the US — rose 4.9% year-on-year to 208.2. The index also jumped 2.75 points from March, a sharp rise compared to the typical monthly move of just 0.2%, according to the auto data firm.

At the March 2025 policy briefing, US Federal Reserve Chair Jerome Powell said the economy “seems to be healthy” despite a sharp decline in sentiment. He added that while activity hadn’t weakened significantly, the economic outlook was “unusually elevated” in terms of uncertainty.

Powell noted that the Fed was prepared to remain patient and observe how conditions evolve before deciding on further policy action.

Craig Chan, Head of Global FX Strategy at Nomura, says investors are becoming nervous due to shifting US policies. First, concerns focused on global risks and their impact on artificial intelligence. Later, the spotlight moved to trade rules and restrictions. Now, some are even questioning whether US treasuries could be taxed differently. All these changes have made investors less confident, leading many to reduce their US investments.

Federal Reserve Chair Jerome Powell will announce his policy decision at 11.30 pm (IST). Markets largely expect the Fed to keep interest rates steady for the third straight meeting, following a 25 basis point cut in December that brought the rate to 4.25%–4.5%.

According to the CME FedWatch Tool, there is almost no expectation of a cut in May, while the chances of a 25 bps reduction in June stand at about 30%.

According to the Financial Times, nearly every analyst they surveyed expects the same outcome: tariffs at current levels are likely to dampen growth and push up prices. The paper agrees with this consensus, noting that even though affluent US consumers still have some financial buffer, this may not be enough to fully curb inflationary pressure. In fact, higher prices could be on the way.

The FT also reports that a broader slowdown is becoming more probable. While a sharp rise in unemployment might be tempered by slower growth in the labour force, most analysts still anticipate joblessness could climb to around 4.8%. Though overall economic activity remains relatively firm, early signs of strain are visible—durable goods purchases have weakened, input costs are rising across sectors, and shipping data indicates a pullback in trade with China.

The US Federal Reserve will announce its interest rate decision on Wednesday, May 7, 2025, at 2:00 p.m. Eastern Daylight Time (EDT), which corresponds to 11:30 p.m. Indian Standard Time (IST) the same day.

Catch all the live updates on Jerome Powell’s address here

US Treasury Secretary Scott Bessent, in testimony before the House Financial Services Committee on Wednesday, declined to share details on the status of ongoing trade negotiations, citing the sensitivity of the discussions.

Responding to a question from Representative Nydia Velázquez, Bessent said, “It would be detrimental to the interest of the United States,” adding that talks may still be underway. “We are not at the end of the week yet,” he said.

Bessent is expected to travel to Switzerland on Thursday for a key meeting with Chinese officials, joined by US Trade Representative Jamieson Greer.

Of the 18 trade agreements under negotiation, Bessent said several are in “quite advanced” stages but clarified that any initial pacts would be “agreements in principle” and would take months to finalise. (Source: CNN)

Goldman Sachs expects the US Federal Reserve to cut rates in July, September, and October, per a CNBC report.

“We think it will take a couple of months for enough hard data evidence to accumulate to make the case for a cut,” Goldman Sachs economist David Mericle said in a note.

The firm expects inflation concerns to take priority over economic weakness.

The Federal Reserve is expected to announce its latest monetary policy decision at 11.30 pm IST. CNBC reports that Fed funds futures are pricing in a near-certainty that the central bank will hold the borrowing rate steady.

The major averages experienced a decline from their recent highs after Treasury Secretary Scott Bessent clarified that the trade talks scheduled for this weekend in Switzerland with Chinese officials would primarily be preliminary. Initially, news of these discussions had given equities a boost.

Traders will closely monitor Fed Chair Jerome Powell’s post-decision press conference for valuable insights into the potential trajectory of interest rates in the future. This announcement comes at a critical juncture for the central bank leader, who has faced criticism from US President Donald Trump, who has expressed his desire for his “termination to come swiftly.”NewsLive TVMarketPopular CategoriesCalculatorsTrending NowLet's Connect with CNBCTV 18Network 18 Group :©TV18 Broadcast Limited. All rights reserved.