FX.co ★ Fed to Await Greater Clarity on Economic Outlook

Federal Reserve officials noted that the recently announced tariff hikes were significantly larger and more comprehensive than expected, with considerable uncertainty about future trade policy and its economic impacts—specifically in terms of extent, timing, and duration, according to the minutes from the May Federal Open Market Committee (FOMC) meeting. They viewed this level of uncertainty as exceptionally high and expressed concerns that the risks to employment and economic activity had increased, along with potential upward pressures on inflation. During their discussion on monetary policy, participants concurred that, given the robust growth in the economy and the strength of the labor market, coupled with a policy stance that remains moderately restrictive, the Fed was well-positioned to remain cautious and await clearer indications regarding inflation and broader economic trends. They agreed that the heightened uncertainty surrounding the economic outlook necessitated a prudent approach until the implications of recent government policy changes become clearer.