Fed ‘couldn't confidently say’ if rate cuts will happen this year 

The Federal Reserve opted to stay the course on monetary policy following its May 7 meeting, making no changes to the baseline interest rate. The decision was consistent with analyst expectations and a continuation of the Fed's cautious approach. 

"We think we're in the right place to wait and see how things evolve," Fed Chair Jerome Powell said during a post-meeting press conference. "We don't feel like we need to be in a hurry. We feel like it's appropriate to be patient," he added, noting that "we can move quickly when that's appropriate."

While Powell acknowledged that the economic outlook is less certain today — largely due to changing tariff policies — he characterized overall economic activity and the job market as "solid." At the same time, he noted that "the risks of higher unemployment and higher inflation have risen."

The tariff factor: President Donald Trump's tariff policies took center stage during the press conference. If tariffs are increased or sustained, "they're likely to generate a rise in inflation, a slowdown in economic growth, an increase in unemployment," Powell said — but "there's so much uncertainty about the scale, scope, timing and persistence of the tariffs." 

Until there's more clarity, Powell said "it's too early to know" what the implications will be for the economy or predict where rates need to go.

"May will be a very telling month," said Melissa Cohn, regional VP of William Raveis Mortgage, suggesting that the effects of tariffs and other economic policies could soon become clearer. "Until the Fed is comfortable that the rate of inflation is not going to skyrocket, they're not going to be in a position to be able to cut rates," she added. 

Will the Fed cut rates this year? In March, the Fed was still forecasting two rate cuts in 2025 — but now? Powell wouldn't commit.

"There are cases in which it would be appropriate for us to cut rates this year. There are cases in which it wouldn't, and we just don't know until we know more about how this is going to settle out and what the economic implications are for employment and for inflation," Powell said. 

"I couldn't confidently say that I know what the appropriate path will be."

On the Fed's relationship with the White House: Trump has repeatedly said he's unhappy with Powell and the Fed's reluctance to cut rates, at times suggesting he could fire the Fed chair while also saying he has "no intention" of doing so. But the president has been consistent about his desire for lower rates. When asked how those demands impact the committee's work, Powell said flatly, "It doesn't affect doing our job at all."

"We're always going to do the same thing, which is we're going to use our tools to foster maximum employment and price stability for the benefit of the American people, we're always going to consider only the economic data, the outlook, the balance of risks, and that's all we're going to consider," he added.

Powell also noted that he hasn't met with Trump, and he has no plans to initiate a meeting. "I've never asked for a meeting with any president, and I never will," he said. "I think it's always come the other way — the president wants to meet with you — but that hasn't happened."