FOMC Recap: Waiting for the Dust to Settle

In its May meeting, the Federal Open Markets Committee (FOMC) held rates steady at an upper bound of 4.5%, pausing for the third straight meeting after cutting 100bp since September. The official statement noted the increased uncertainty of the economic landscape and risks to both higher inflation and unemployment – an admission that stagflation is a concern . Given the questions about “the scale, scope, timing, and persistence of the tariffs” and their effect on the economy, the Fed will feel content to sit tight until “the appropriate direction becomes clear.”