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Qadir AK
Qadir AK
Author
Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.
- May 07, 2025 10:38 UTC
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How do Trump Tariffs Impact the FED Interest Rate Decision Today?
Fed likely to maintain interest rates amid stable inflation and low unemployment, adopting a cautious "wait and see" approach.
Trump tariffs and improving US-China trade talks may boost investor confidence and support a stronger US dollar recovery.
The Federal Reserve is expected to keep interest rates steady this week, with a 95% chance of no changes, as it adopts a cautious “wait and see” approach. Despite a slow economy in Q1, inflation remains slightly above the 2% target, while unemployment stays low, giving the Fed more time to assess market conditions. The FED interest rate decision is crucial, as the Trump tariffs and ongoing US-China trade talks could influence future actions.
Trump Tariffs and Trade Optimism
The latest Trump tariffs and trade discussions between the US and China are bringing renewed optimism to the market. Credit Suisse analyst Ipek Ozkardeskaya notes that improving trade relations could boost risk assets and revive investor confidence in the US dollar. While the dollar didn’t surge during the peak of the tariff war, a shift in sentiment could drive its near-term performance.
FED to Stay in “Wait and See” Mode
The Federal Reserve remains focused on data, with many expecting no immediate rate cuts. As the Fed weighs Trump’s tariffs and a $4 trillion budget plan, it will likely hold off on making any drastic decisions. Although inflation is still above 2%, the FED interest rate decision will depend on the ongoing trade talks and economic trends.
Dollar Could Rebound Amid Trade Optimism
Trade optimism surrounding Trump tariffs and negotiations could potentially lift the dollar, shifting from a safe-haven narrative to broader confidence. Ozkardeskaya believes that this shift could reignite demand for the US dollar, marking a key development as the FED interest rate decision looms.
FED Interest Rate Decision
With little indication of drastic shifts in the economy, Fed Chair Jerome Powell is expected to keep messaging minimal, even as President Trump pushes for rate cuts. Analysts predict that the Fed may only cut rates if the labor market weakens significantly.
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FAQs
Trump tariffs may boost trade optimism, lifting risk assets and strengthening the U.S. dollar in the short term.
Yes, improving U.S.-China trade relations could influence future Fed policy by boosting market confidence.
Yes, renewed optimism from tariff negotiations may shift sentiment and strengthen the U.S. dollar.
Yes 
No 
